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REFLEXIONS UPON REGIONAL GROUPS OF STATES:
The three Moslem organisations
By
Jan-Erik Lane
For ECPR, Nicosia, April 2006
Abstract
Regional organisation covers more and more states. They come in different forms and serve a
variety of purposes. To pin down some of the main differences among them one may look at
regional coordination mechanisms in the Muslim civilisation. There only the Gulf
Cooperation Council is considered to display strong agency, whereas the Aral League targets
diffuse ethnic goals attempting the coordination of the Arab nation, whereas the Islamic
Conference expresses the amorphous religious community of Moslems. Given that regional
organisation comes with a cost, as an increasing number of employees and
communities/bodies must be paid for, it seems essential to enquire into the benefits of
regional organisations, especially when they appear to lack agency, as with the League and
the Conference. Perhaps these two organisations deliver other benefits than the tangible
outcomes of economic integration that the GCC promotes? Theorising the process of
regionalisation one needs to distinguish between intentions and functions.
INTRODUCTION
Regional groups of states now cover most of the existing 200 states of the world. Some socalled rogue states are not accepted as members in regional groups. A few very important
states have decided to remain outside of the process of regionalisation, at least formally so –
Japan, India and China for example. Yet, regional organisations cover most of the globe
(Lane, 2006). What are the basic motives behind setting up and operating such regional
groups of states?
Can regional coordination be driven by religion? It is sometimes said that the EU amounts to
a Christian Body, but no one would state that officially. Yet, the Gulf Cooperation Could
(GCC) has an officially stated religious goal, namely to further the interests of Islam,
including Sharia Law. Actually, all three coordination mechanisms in the Muslim civilisation
refer publicly to religion, and two of them mention the interests of the Arab nation. Yet,
regional coordination must have more mundane interests than religion and ethnicity.
I will discuss the problem of motives by looking more closely at the three regional groups of
states in the Moslem civilisation, namely the GCC, the Arab League and the Islamic
Conference. Whereas the Arab League was the first regional group of states to be created, the
Moslem Conference has only existed some thirty years. The Arab League contains an ethnic
marker, while the Islamic Conference employs a religious marker. Yet, the interests that these
two organisations pursue cannot be described as chiefly either ethnic or religious. What, then,
is their rationale? The Gulf Cooperation Council targets economic cooperation in the form of
a common market.
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What follows in this paper is more an explorative analysis of the incentives towards
regionalisation than an indebt empirical inquiry into these three Moslem groups of states.
There is little research published on these organisations, but from official materials and the
past record of events one may construct an image of how they operate. The theme of a chock
of civilisations has become more and more relevant for understanding the politics of
globalisation. And recent developments taking place in the Moslem civilisation play no doubt
a major role in fuelling this civilisation tension. Do Moslem or Arab countries really
coordinate as a compact civilisation?
RELIGIOUS or ETHNIC COORDINATION: Is it at all feasible?
Although these three organisations all claim to defend the religion of the Arab or Moslem
civilisation, this objective could not possibly be a first priority. The reason is simply that the
Moslem world is much too divided into various religious groups and sects to allow any real
coordination of religious interests. Besides the major split between the Sunnis and Shi'as,
there is in addition a rich carpet of religious sects as well as the newly emerging Moslem
Brotherhood. In reality, no form of religious coordination has ever worked for the Moslem
civilisation in general or the Arab civilisation in particular.
Any attempt to move beyond the minimal ambition of protecting Islam in general and
building mosques in e.g. Russia would immediately bring forward the immense tensions
among different religious groupings. The growth of Moslem Brotherhood as an omni present
organisation in all Moslem countries, openly or secretly, has made the religious scene even
more confusing. Several of the member states in the Arab League and the Islamic Conference
face anarchy within their borders due to religious conflict. The strategy chosen in relation to
terrorist groups like e.g. Al-Qaeda differs from one government to another.
The basic interests of the members of these Moslem organisations must be searched for
elsewhere than religion. What might matter for the 22-57 governments being members of
either the Arab League or the Islamic conference or both is to show a united common front
against other civilisations, especially the so-called Occidentals. Yet, such a posture would
face a credibility problem, given the evidence of huge internal splits, especially in terms of
religion. Thus, there must exist interests – real or imagined, which lead government to support
for these organisations. These regional organisations have fairly large budgets and many
employees meaning costs have to be covered. What are, then, the benefits?
COSTS AND BENEFITS IN REGIONAL ORGANISATION
Assuming that human beings when engaging in social interaction, whether in elementary
forms or complex forms, seek to capture some benefits while holding down costs, we may ask
why governments would set up and run regional organisations. Presumably, because they
bring more benefits than costs to the states, whose agents the respective governments are.
Since regional organisation admits of a variation in size, one may calculate in a rough manner
the cost function, Cost = f (Size) since more of regional organisation invariably involves more
employees, more bodies, more expenses, etc. Let me focus upon the direct costs of regional
organisation and entirely bypass the indirect ones, meaning the costs imposed upon others.
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The principal difficulty with regional organisation is to estimate the other side of the coin, the
benefits of setting up and running regional bodies – the value of such mechanisms. The
benefits include both the private incentives of the people involved in regional organisation
and the social objectives, furthered, one hopes, by those organisations. Regional organisations
would no doubt be subject to the law of Parkinson's disease, as the employees and
functionaries in these bodies chase lucrative employment and other contracts. But why would
the principals of regional organisation be involved in playing such Niskanen games? Since the
private benefits of private organisation could not possibly be larger that its total costs, there
must be other benefits involved order to get the basic equation going: Benefits > Costs, in
regional organisation. I do not wish to propose that regional organisations are capable of
achieving rationality, i.e. Total Benefits – Total Costs = Maximum, but I would insist that
social objectives make a difference.
Yet, the accomplishment of social objectives is seriously problematic to pin down with any
set of actors, also governments. Stated goals may not be the real ones, objectives and
functions may be confused, and a group of actors like states tend to disagree about what
should be done or what has been achieved.
REGIONAL INTEGRATION: Three Dimensions
One may see in the regional organisation in the Muslim civilisations as experiences of the
typical variety of objectives in regionalisation. Thus, governments may bind their states in
regional organisations orientation, towards economic, foreign policy or cultural objectives,
speaking ideal-typically. It is far from certain that economic motives would be the most
powerful force in regionalisation. Yet, economics offers some of the most relevant conditions
for the joining up of regional groups - the GCC case. There are regional organisations that
almost exclusively target economic objectives, like the NAFTA and the Mercosur. However,
many regional organisations have multiple goals and economic ones may not be preponderant.
Foreign policy goals may loom largely behind regionalisation, either as defence against a
perceived foreign threat or as a mechanism for containing conflict among the participant
states. Here, one would place the Arab League here. The ASEAN would be another example
of this goal type. Foreign policy integration may produce little in terms of visible outcomes,
as the existence of peace is taken for granted. Yet, it may be as important as the highly visible
signs of economic integration and growth. Foreign policy integration tends to be slow and
frustrating, but if it contains conflict, then it may be worth while. The problem with the Arab
League is that it failed in many respects with regard to its foreign policy goals.
Finally, regional groups may target culture or Third Sector functions, like the Islamic
Conference. It is not clear that the benefits outweigh the costs in this type of organisation.
CAUSES AND FUNCTIONS OF STATE REGIONALISATION
One may go back to the distinction between conditions and functions when one attempts to
theorize the growing relevance of regional groups of states (Merton, 1968). The emergence of
a system of regional groups of states has a number of seminal consequences, which may not
have been foreseen at the time of their creation. These so-called latent functions could prove
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very important to humanity when it comes to the governance of globalisation. Yet, these
effects are not the same as the causes of regionalisation or motives.
One of the major functions of regionalisation is to facilitate global coordination. Thus,
attempting to govern the process of globalisation – economically, environmentally, and
politically – is much facilitated when the number of players is brought down. Whatever the
efficiency of the meetings of G7 or G8 and G20 may be, it means a difference, if Europe
speaks with one voice instead of 25-30 voices. In the so-called dialogue of civilisations it
saves time and effort, when the regional groups of states communicate with each other, as
happened for instance in the Mohammed caricature affair in early 2006. However, facilitating
the communication between civilisations may never have been an explicit or implicit goal
behind the erection of a regional group of states. The causes of regionalisation are to be
sought among the interests that drive the players in this new type of interaction, i.e. mainly the
governments of the states of the world. And these interests could display great variety, from
symbolic ones to tangible economic ones.
Whether the functions served by regionalisation also constitute motives is an entirely open
question, given the ever-present difficulty in predicting macro outcomes. The separation
between causes and functions is as valid as the recognition of a variety of objectives behind
regionalisation. There is not one single model of regionalisation, as regional groups of states
may be set up for a variety of motives, serving a diversity of intended or unintended
functions. Regionalisation is not the same as regional economic integration, as outlined in the
well-known Balassa model (Balassa, 1985). Economic motives may play a subordinate role,
political or cultural objectives taking precedence. One highly tangible goal is security, i.e.
foreign policy cooperation.
To avoid war may be worth the costs of setting up and supporting a regional organisation.
Although one sometimes reads about the delay in payments from one or two member states of
the Arab League, it may certainly be stated that most of these states can afford to pay the
yearly dues, especially the Oil Monarchies and the Petrol Republics. As a quid pro quo, they
would receive a guarantee of peace and non-interference in internal affairs – a precious goal
in turbulent times no doubt. Foreign policy coordination could amount to merely mutual
respect and territorial integrity. But these goals may be highly valued by the governments
concerned, as is the case for instance in the ASEAN. Regulating war and enhancing peace
may develop into the major preoccupation, not by fiat but by unfortunate circumstances – see
West African integration with ECOWAS. The systemic and long-run instability typical of
Western and Central Africa cannot be compared with the so-called football war that once
broke out between some of the participating states in the Caribbean regionalisation. Today,
regional cooperation in the Caribbean (CARICOM) focuses upon economic integration with
future prospects for collaboration with NAFTA and MERCOSUR as well as with the
ANDES. Thus, it is difficult to tell generally whether political objectives or economic goals
play the major role in the ongoing regionalisation processes around the world. Both political
and economic functions may be served whatever the incentives at regionalisation could have
been from the start.
If mainly economic goals were to be served, then why would not the governments of the
states of the world move directly to a multi-lateral approach favouring the creation of one
global market economy, governed by the Bretton Woods framework: the World Bank, the
IMF and the World Trade Organisation? Most economies in the world are today so-called
open ones. Thus, it would be in the interest of countries to opt for a global regime of low trade
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restrictions and similar rules for foreign direct investment. Countries could also negotiate an
encompassing system of bilateral free trade agreements. Can one then perhaps conclude that
regionalisation is only a temporary phenomenon in the unstoppable trend towards one global
market economy? This logic would apply when countries enter regional groups for
predominantly economic reasons and such a logic will most probably reduce the number of
regional organisations in Latin America and possibly also in Africa, but regionalisation is not
mainly driven by economic goals such as maximising the size of the market, improving the
predictability of economic rules enforcement and attracting FDR:s.
Culture also plays a major role, as two of the regional groups covering Moslem countries
testify to. Probably politics and security loom very large in regionalisation. Table 1 has some
basic facts about several regional groups of states, although the list is not exhaustive.
Table 1. Some Regional blocs
Regional
bloc
Area
(km²)
GDP (PPP) ($US)
Population
Member
millions
states 1
in
Per
billions capita
European Union
3978
460
11800
25,480
25
Caribbean Community and
Common Market CARICOM
462
14
642
4,409
14+1 3
Economic Community of West
African States ECOWAS
5113
252
3425
1,361
15
Economic and Monetary
Community of Central Africa
CEMAC
3020
35
851
2,435
6
East African Community EAC
1764
98
1042
1,065
3
South African Community
of Nations CSN
17339
370
2868
7,749
10
Gulf Cooperation Council
GCC
2286
36
5362
14,949
6
Southern African Customs Union
SACU
2693
51
5414
10,605
5
Common Market of East and
Southern Africa COMESA
3779
119
142
1,193
5
North American Free trade Area
NAFTA
21589
431
12890
29,942
3
6
Association of South East Asian
Nations ASEAN
4400
554
2172
4,044
10
South Asian Association for
Regional Cooperation SAARC
5137
1467
4,074
2,777
8
Eurasian Economic Community
EurAsEC
20789
208
1,689
8,118
6
Central American Common
Market CACM
423
38
159
4,219
5
Pacific Regional Trade Agreement
528
PARTA
78
23,074
2,954
12+2 3
One may compare these organisations with a few mega states:
India
3288
1103
3433
3,100
China
9597
1307
7249
5,200
Russia
17075
144
1282
8,900
In the Muslim civilisation there is besides the GCC also the Arab League and the Islamic
Conference. What, more specifically, do they coordinate?
SHORT HISTORY OF THE MOSLEM GROUPS OF STATES
In the Muslim world one finds three active regional organisations: the Arab League and the
Islamic Conference as well as Gulf Cooperation Council. The Conference comprises many
more countries than the League, as it is based upon religion whereas the former focuses upon
ethnicity. Yet, their interests go much beyond both religion and ethnicity. The GCC has the
ambition of delivering a compact body.
There is not a large literature analysing these regional groups of states, not even in Arabic. No
attempt can be made here to deal in great depth with the details of these two organisations.
Instead, I will focus upon a few theoretical questions that arise in relation to the Arab League
and the Islamic Conference as well as the GCC, namely:
1) What is their basic rationale: politics, economics or culture?
2) Why three organisations?
Regional organisation can be done on several grounds. The interesting thing about the three
organisations for the Muslim world is that they really are not at all about religion. The Muslim
civilisation is as divided as the Christian civilisation into various communities and sects. No
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organisation could possible represent them all, given the intense struggle between the many
currents of Islam. What, then, are these organisations promoting as agents of their principals:
the Arab governments and the Muslim states. Let me look at the officially stated goals.
The Organization of the Islamic Conference (OIC) is an inter-governmental organization that
includes fifty-seven member-states. The governments of these Moslem states have decided to
pool resources together in an effort to speak with one voice in order to safeguard the interests
and ensure the progress and well-being of their peoples and those of other Muslims in the
world over - at least so it is stated officially. What could these common interests be?
The Organization was established in Rabat in 1969. It was argued that the main goal of
creating the organisation was to liberate Jerusalem and Al-Aqsa from so-called Zionist
occupation. However, this is of course not true as such an unrealistic objective could not
possibly warrant the taking on of all the costs of this organisation, rationally speaking. The
First Islamic Conference of Ministers of Foreign Affairs was held in Jeddah in 1970 and it did
set up a permanent General Secretariat as a liaison among Member States and charged it to
coordinate their action. The Conference appointed its Secretary General with Jeddah as its
temporary Headquarters of the Organization, with the argument that the coming liberation of
Jerusalem would make this now Jewish site the permanent Headquarters of the organisation.
The Islamic Conference has promoted several religious aims, building Islamic Colleges, and
Cultural Institutes and Centres to spread Islamic culture and dispense the teaching of Arabic
as the language of the Koran. Yet, two and a half years after Rabat the Islamic Conference of
Foreign Ministers adopted the Charter of the Organization, aiming at strengthening solidarity
and cooperation among Islamic States also within the political, economic, cultural, scientific
and social fields. Under the Charter, the Organization aims to:
“1. Strengthen: a) Islamic solidarity among Member States; b) Cooperation in the political,
economic, social, cultural and scientific fields: c) The struggle of all Muslim people to
safeguard their dignity, independence and national rights. 2. Coordinate action to: a)
Safeguard the Holy Places; b) Support the struggle of the Palestinian people and assist them in
recovering their rights and liberating their occupied territories. 3. Work to: a) Eliminate racial
discrimination and all forms of colonialism; b) Create a favourable atmosphere for the
promotion of cooperation and understanding between Member States and other countries.”
The Charter enumerates guiding principles governing OIC activities. Here it should be
underlined that one may find some tangible objectives, namely:
“Full equality among Member States Observation of the right to self determination and noninterference in the internal affairs of Member States. Observation of the sovereignty,
independence and territorial integrity of each State. The settlement of any dispute that might
arise among Member States by peaceful means such as negotiations, mediation, conciliation
and arbitration. A pledge to refrain, in relations among Member States, from resorting to force
or threatening to resort to the use of force against the unity and territorial integrity or the
political independence of any one of them.”
These guiding principles deal more with the internal relationships between the Moslem
countries than with the idea of a future destruction of Israel. These guiding norms are thus
much more realistic than the officially stated one goal of making Jerusalem the capital of the
Islamic Conference. Foreign policy objective when mundane and realistic may warrant the
taking on of sizeable costs.
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The Organization has main bodies as well as secondary organs, institutions and specialized
committees. The formal structure of Islamic Conference as follows: The Conference of Kings
and Heads of State and Government is the supreme authority of the Organization, which
meets once every three years to decide upon the Organization's policy. The Conference of
Foreign Ministers meets once a year to examine a progress report on the implementation of its
decisions taken within the framework of the policy defined by the Islamic Summit. The
General Secretariat is the executive organ of the Organization, entrusted with the
implementation of the decisions of the two preceding bodies. There is in addition a wide
structure of committees including e.g. The Al-Quds Committee, the Standing Committee for
Information and Cultural Affairs COMIAC), the Standing Committee for Economic and
Trade Cooperation (COMCEC), the Standing Committee for Scientific and Technical
Cooperation (COMSTECH) and the Islamic Peace Committee, chaired by the Heads of State.
In addition, fourteen Committees deal with other important issues such as Palestine, the Sahel,
Afghanistan, and Kashmir etc.
The number and types of secondary organs and institutions, working toward the achievement
of the OIC objectives, have been steadily increased in order to cover various areas of cultural,
scientific, economic, legal, financial, sports, technological, educational, media, as well as
vocational, social and humanitarian. Actually, one would expect to find such a rich umbrella
of various supporting organisations, given the rather fluid goal function of the mechanism,
covering the whole range of civil society tasks. From the perspectives of objectives, funding
and running Third Sector functions promotes both mutual understanding between countries
and the private interests of officials in a secure and high salary, which is most probably tax
exempt. One may identify a specific propose behind these Third Sector functions, namely the
inculcation of a common spirit among key citizens of the member states. The achievement of
this goal could have long-term consequences for the coherence of the regional organisation,
which is as important as the protection of foreign policy goals or the advancement of the
economic objectives.
The League of Arab States, or Arab League, antedates the Islamic Conference, being a
voluntary association of sovereign states whose peoples are mainly Arabic speaking. Its stated
purpose is to strengthen various kinds of ties among member states, coordinate their policies
and direct them towards the common good. It has 22 members, including Palestine. Actually,
UK first launched the idea of the Arab League in 1942, as the British wanted to rally the Arab
countries together against the Axis powers. The league was, however, created in 1945 with
the purpose of freeing those Arab countries that were still under colonial rule, and preventing
the Jewish minority in Palestine from creating a Jewish state. The highest body of the league
is the Council, which consists of representatives of member states, usually the foreign
ministers, their representatives or permanent delegates. Each member state has one vote,
irrespective of its size. The council meets twice a year, in March and September, and may
convene a special session on request of two members. However, the day-to-day running of
Arab League affairs is entrusted to the general secretariat. Headed by a secretary-general, it is
the administrative body of the league and the executive body of the council and the
specialised ministerial councils.
Thus, the Arab League, founded in Cairo, by Egypt, Iraq, Lebanon, Saudi Arabia, Syria
includes Tran Jordan (Jordan, as of 1950), and Yemen, Algeria (1962), Bahrain (1971),
Comoros (1993), Djibouti (1977), Kuwait (1961), Libya (1953), Mauritania (1973), Morocco
(1958), Oman (1971), Qatar (1971), Somalia (1974), Southern Yemen (1967), Sudan (1956),
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Tunisia (1958), and the United Arab Emirates (1971). Egypt's membership was suspended in
1979 after it signed a peace treaty with Israel; the league's headquarters was moved from
Cairo, Egypt, to Tunis, Tunisia. In 1987 diplomatic ties with Egypt were resumed, as Egypt
was readmitted to the league in 1989 and the league's headquarters was moved back to Cairo.
The Arab League states that it conducts political, economic, cultural, and social programs
designed to promote the interests of member states. Moreover, it claims that it has served as a
forum for member states to coordinate their policy positions and deliberate on matters of
common concern, settling Arab disputes and limiting conflicts. It is true that the Arab League
has offered a platform for the drafting and conclusion of documents promoting economic
integration among member states, such as the creation of the Joint Arab Economic Action
Charter with principles for economic activities of the league. It is also true that it has played
role in shaping school curricula, and preserving Arab cultural heritage. Moreover, the Arab
League has launched literacy campaigns, and reproduced intellectual works, and translated
modern technical terminology for the use of member states. It has encouraged measures
against crime and drug abuse and deals with labour issues (particularly among the emigrant
Arab workforce). The Arab League has thus fostered cultural exchanges between member
states, encouraged youth and sports programs, helped to advance the role of women in Arab
societies, and promoted child welfare activities. Yet, its foreign policy achievements have
been meagre.
The original charter of the Arab League created a regional organization of sovereign states
that was neither a union nor a federation. The members eventually formed a joint defence
council, an economic council, and a permanent military command. However, Arab unity has
been all but lacking on most critical issues.
The Gulf Cooperation Council was established in 1981 in Riyadh between: Bahrain, Kuwait,
Oman, Qatar, Saudi Arabia and UAE, given the special relations between them, their similar
political systems based on Islamic beliefs, joint destiny and common objectives. The GCC is a
regional common market with a defence planning council. The GCC Charter speaks of the
common qualities: the creed of Islam, as a common destiny, saying also that cooperation
among these states serves the sublime objectives of the Arab nation.
Cooperation in the military field loosens large among the GCC states. The security challenges
in an unstable regional environment, like the Gulf area, have led the GCC States towards
coordination of their policies and mobilization of their capabilities. The immediate objective
was to protect them from the threat posed by the Iran-Iraq War and Iranian-inspired activist
Islamism. The chiefs of staff and defence ministers of the Gulf States have developed plans
for mutual defence and launched efforts to form a joint command and a joint defence network.
Ground and air units of the six member states have carried out multilateral exercises. Military
assistance, funded mainly by Saudi Arabia and Kuwait, was extended to Bahrain for fighter
aircraft and a modern air base, and to Oman to improve its defensive capability at the Strait of
Hormuz. Based on security an aggression against any one of them is deemed an aggression
against all of them.
Yet, little concrete has been achieved in terms of a common military defence mechanism. A
two-brigade Peninsula Shield Force was created, based in Saudi Arabia. In addition to a
headquarters staff, the force consisted of one infantry brigade of about 5,000 men with
elements from all GCC states in 1992. Its mission, however, had not been publicly defined.
The force could be enlarged at a time of threat. Thus, it was reinforced prior to the Persian
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Gulf War in 1991 but did not take part in the war as a distinct unit. The GCC States seek to
build up their defence forces according to a common conception with unified operational
procedures, training, and military curricula as well as compatibility of their military systems.
Moreover the armed forces of the GCC States have carried out joint military exercises with
the Peninsula Shield Force.
The structure of the Secretariat-General amounts to a broad based organisation including: (1)
A Secretary-General appointed by the Supreme Council for a period of three years renewable
only once. (2) Three Assistant Secretaries-General for political, economic and military affairs,
as well as the head of the GCC delegation to Brussels, who are appointed by the Ministerial
Council for three renewable years, upon nomination of the Secretary-General. (3) Directorsgeneral of the Secretariat-General sectors as well as other staff that are appointed by the
Secretary-General. The administrative structure comprises a number of sectors: Political
Affairs, Economic Affairs, Military Affairs, Human and Environment Affairs, Legal Affairs,
Office of the Secretary-General, Finance and Administrative Affairs, Patent Bureau,
Administrative Development Unit, Internal Auditing Unit, and Information Centre, in addition
to the GCC Delegation in Brussels and the Telecommunications Bureau in Bahrain.
The GCC has tried to act in the field of foreign affairs, as manifested in the formulation of a
homogeneous Gulf stance towards political and security issues of interest. The GCC Member
States claim that they use the following guidelines when dealing with international issues: the
Charter of the United Nations, abiding by the rules of international conduct, respecting their
Arab and international obligations, adhering to the principles of good neighbourliness, mutual
respect of sovereignty, non-acquisition of others' land by force, respect of others' sovereignty
over their resources, and observance of negotiation as an effective instrument for settlement
of disputes, in line with the principles of peaceful co-existence as declared by the United
Nations and confirmed by international laws. Yet, more spectacular than foreign policy
cooperation is the economic integration with the GCC.
An important achievement in this regard is the repeal of entry visas and residence permit
requirements for the GCC citizens travelling to other GCC Member States. The GCC
Member States set up a free trade zone already in 1983, according to which the goods of
national origin have become exempted of customs tariffs. This is seen by the GCC itself as the
first stage in the process of economic integration. The GCC Member States aim at setting up a
customs union. Riyadh summit in 1999 approved a timetable to set up such union effective
March 2005. Although the customs union represents the second stage of economic
integration, however, the GCC has already advanced in great strides in the fulfilment of the
third stage, which is the initiation of a Gulf Common Market. Such a goal entails the free
movement of goods and abolishing of barriers to the movement of elements of production,
especially people and capital. Cooperation in security encompasses the fields of traffic,
punishment and correction establishments, immigration and passports, airport security, antidrug trafficking, anti-arms and explosives smuggling, border guards, coast guards, and civil
defence. Specialised committees have been formed to strengthen cooperation in these fields.
The Unified Economic Agreement lays down certain guidelines: equal treatment of GCC
citizens in respect of freedom of movement, work, residence, engaging in economic activities,
movement of capital, and ownership of real estate including practice of retail and wholesale
trade, ownership of shares and real estates, engaging in different professions and economic
activities such as agriculture, industry, contracting, animal resources, establishment of hotels
and restaurants, establishment of training centres, and obtaining loans from industry
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development funds and banks in the GCC States. Such implementations have paved the way
for setting up the Gulf Common Market. In addition, GCC States have attempted to unify
their economic policies. Indeed, a number of instruments relevant to the objectives and
policies of the development plans have been ratified, as well as Joint Agricultural Policy,
Unified Industrial Development Strategy, the General Framework of the GCC Population
Strategy, and the Long-Term Comprehensive Development Strategy 2000-2025. With respect
to linking GCC infrastructures, the Member States seek to accomplish the first phase of
linking high voltage electricity grids. They also endeavour to complete the direct land route,
the network of communications, and the Gulf network of ATM.
The GCC coordinates trade policies and relations with other economic blocks. The GCC has
launched negotiations with major trading partners and signed the Cooperation Agreement
between GCC Member States and the European Economic Community in 1988. At present,
negotiations are ongoing with the European Union to reach a free trade agreement. Moreover,
the GCC is also involved in an economic dialogue with the United States of America resulting
in a free trade agreement in 2006. Commercial cooperation aims to abolish customs barriers
among GCC States and exempt national products from customs duties. Other major objectives
include the unification of customs tariffs as well as the coordination of export and import
policies in order to create a common negotiating position.
The GCC states that it has sought to harmonise regulations and laws paving the way towards
total unification, surprisingly on the basis of Koranic jurisprudence. To that end, and since
1982, Islamic Sharia is laid down the only source for legislations and jurisprudence in
Member States. It could of course be argued that medieval law is not a suitable foundation for
legal harmonisation. But all the three Moslem regional groups emphasize their adherence to
the basics of Islam. It is only that the GCC has shown that the modern objective of regional
economic coordination can be accomplished despite such religious bedrock. Thus, behind the
veil of religion all three Moslem organisations pursue political or economic goals, the GCC
more than the other two.
INCENTIVES IN REGIONALISATION
Regional groups of states must have some common interests in order to take on the costs of
regionalisation. As the costs could be quite substantial, there must be some tangible benefits
to be riped from setting up an elaborate regional organisation. The incentives among the
participants need not coincide. Thus, some governments may engage in regionalisation for
reasons of foreign policy whereas others pursue economic interests or cultural needs. The
publicly stated goals cannot be taken as the real objectives of the participants. Thus, there is
bound to be confusion about what action the regional organisation should pursue, as explicit
ends collide with implicit ones and the various governments have different strategies. The
following goals appear to be relevant to the two Moslem organisations:
(1) Military objectives: Only the Arab League could have some common military goals, such
as counteracting Israel, defending the rights of Palestinians and safeguard the independence of
Arab states. It is difficult to imagine some common defensive or offensive objectives among
the large number of governments participating in the Islamic Conference.
The Arab League has been much occupied with the Israeli-Palestine conflict. However, since
the Seven Days War and the Yom Kippur War, there has been little coordination among the
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Arab governments. Although it is commonplace to express some form of rejection of Israeli
policies or even the state of Israel, the Arab League has not conducted a common strategy in
relation to this conflict. On the contrary, meetings of the League often break up prematurely
due to internal dissent concerning what to do in relation to Israel. Some of the Gulf
Monarchies have very strong ties with the US, as evidenced in the two Gulf wars concerning
Iraq. As a matter of fact, between several Arab states there is considerable tension with a risk
for military confrontation, at least of a minor nature, such as with Algeria and Morocco. The
only instance of complete foreign policy coordination was the oil export ban after the 1973
war with Israel. The Nasser effort towards an Arab nation-state comes to nothing despite
support from the so-called Bath parties.
(2) Economic objectives: The Arab states have such different economies that economic policy
coordination must be extremely difficult to accomplish. The key resource is of course fossil
fuels, but it is extremely in egalitarian in its distribution. The Gulf Monarchies have a labour
shortage that is often filled by qualified persons from Arab countries that lack oil or gas. The
League may help in the circulation of qualified people between Arab states.
Yet, the petrol and gas revenues for the single states with such resources are so immense that
they do not need any coordination among the League members. In stead, what needs
coordination is the transfer of resources from the rich Arab countries to the poor ones. No
effort has been made to set up something reminiscent of the European efforts at a common
single market. One may actually argue that the Islamic Conference has achieved more than
the Arab League in terms of economic coordination.
(3) Cultural objectives: The Arab civilisation displays enough coherence to serve as the basic
for cultural coordination through the League. Perhaps it is not too daring to state that culture
offers more of cement than economics or foreign policy. Thus, the Arab part of the Moslem
civilisation has always maintained its distinctness with the Islamic civilisation. The League
operates a number of programmes with cultural orientations fostering the Arab legacy.
Yet, there is bound to be overlap between the cultural efforts of the two Moslem
organisations, as the Islamic conference operates the following institutions: The Islamic Fiqh
Academy, The Statistical, Economic, Social Research and Training Centre for Islamic
Countries (SESTRIC), The Research Centre for Islamic History, Art and Culture (IRCICA)
and The Islamic Centre for the Development of Trade (CIDC).
TALK AS REGIONAL ORGANISATION STRATEGY
The symbolic uses of regional organisation should not be underestimated. When the European
Union serves as the benchmark for the creation of regional groups of states, then the focus is
upon the accomplishment of concrete objectives through the achievement of results, such as
economic integration and free circulation of people and goods. Why should the Arab League
be measured according to this measuring rod?
The Arab League is more a symbolic organisation than a rational organisation for pursuing
real goals. It serves the purpose of masking the complete absence of common interests among
the Arab governments, which is not an important non-task to accomplish. The Arab
governments can employ the Arab League as a buffer against turmoil and uncertainties,
referring difficult issues to the deliberations of the League, only to delay the manifestations of
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strong internal dissent. In a different sense according to a different logic, an organisation that
achieves symbolic union where there is no real common heart is not mean accomplishment.
One may argue similarly with regard to the Islamic Conference. Since it is paid through the
immense petrol revenues, there is no financial difficulty to operate such an organisation with
57 member states. But what is it to promote? It can only endorse the vague interests of
cultural and economic cooperation, as the cultural and economic diversity of the member
states would prohibit any other line of action. In a post-modern age with considerable
emphasis upon symbolic action, any organisation that expresses vaguely the values of
Moslem or Arab countries may prove useful, even if they accomplish little specifically. The
concept of Islamic finance appears to be a highly viable one, originating with the Islamic
Conference, although it actually has its origin with Mawdudi, the main theoretician of
Moslem Brotherhood.
Both Moslem organisations operate according to the strict logic of unanimity voting, meaning
that member state sovereignty could not be tampered with. It is unthinkable that the member
states in these organisations would allow for supranationality. These bodies constitute
intergovernmental mechanisms. There is a large carpet of subsidiary Bodies of the Arab
League as well as helping organs.
If talk is cheap although not costless given so many additional bodies within the League, then
no action may be the best strategy. In terms of tangible outcomes not much can be found for
either The Arab League or the Islamic Conference, with one major exception: Islamic
Finance.
UNINTENDED OUTCOMES: Islamic Finance
The Islamic Conference has actually helped promote financial coordination – Islamic finance,
which is rapidly spreading with Moslems around the world. The assets of Islamic financial
institutions could be as huge as $300bn. Most of the large Western financial institutions,
following the example of Citibank, have their own Islamic subsidiaries or, at the very least,
Islamic "windows" or products aimed at their Islamic clientele.
The Islamic Development Bank is an international financial institution established in
pursuance of a Declaration of Intent issued by the Conference of Finance Ministers of Muslim
Countries held in Jeddah in 1973 The present membership of the Bank consists of 56
countries, where the basic condition for membership is that the prospective member country
be a member of the Organization of the Islamic Conference. The Bank was created to foster
the economic development and social progress of member countries and Muslim communities
in accordance with the principles of Shariah Law. The Bank participates in equity capital and
grants loans for productive projects and enterprises besides providing financial assistance to
member countries. The Bank is also required to assist Muslim communities in non-member
countries. The Bank's main office is in Jeddah. Two regional offices have been opened in
1994, one in Rabat, Morocco, and the other in Kuala Lumpur, Malaysia. In July 1996, the
board of Executive Directors approved the establishment of an IDB Representative Office in
Kazakhstan, to serve as a link between IDB member countries and Central Asian Republics.
The Bank also has field representatives in eleven member countries: Indonesia, Iran,
Kazakhstan, Libya, Pakistan, Senegal, Sudan, Gambia, Guinea Bissau, Mauritania and
Algeria.
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The early years of Islamic finance were dominated by oil-producing Arab states, especially
Saudi Arabia, and to some extent Egypt and Pakistan. But the new paradigm of Islamic
finance reflects the diversity of the Islamic world. A wide range of Islamic products is now
available in at least 75 countries. Financial innovation and scholarship has originated within
Muslim minorities outside the Islamic world. Growing areas of Islamic finance fall outside
traditional banking products within areas of finance, such as insurance (takaful) or microlending and Islamic mutual funds.
The Islamic Development Bank started to accept deposits and financial resources through
Shariah compatible modes when modern Islamic finance took off in the early 1970s as a result
of the rise of pan-Islamism and the oil boom. With the start of the Organisation of the Islamic
Countries movement (OIC) in 1970, the idea of updating traditional Islamic banking became
part of the agenda, demanded by Islamic scholars, particularly in Pakistan (Mawdudi).
Research institutes focusing on Islamic economics and finance were established in the
Muslim world. In 1974 the OIC summit in Lahore voted, after oil prices quadrupled, to create
the inter-governmental Islamic Development Bank (IDB), which became the cornerstone of a
new banking system inspired by religious principles. In 1975 the Dubai Islamic Bank - the
first modern, non-governmental Islamic bank - was opened. In 1979 Pakistan embarked on a
full Islamisation of its banking sector. Sudan and Iran followed suit in 1983.
Jurisprudents within Islam have been occupied with reinterpreting a rich legal but precapitalist tradition to suit the requirements of the modern era (Kuran, 1986). There was the
core problem of interest or usury: although commerce had always been central to the Islamic
tradition, profits from pure finance were viewed with suspicion. The Koran states that profits
from commerce are fundamentally different from those generated by money lending (sura 2,
verse 275). More specifically, Islam prohibits what is called riba, which is variously
interpreted, sometimes as usury (or excessive interest), but more often as any kind of interest.
Islamic scholars equate riba with interest, even though they accepted that time must be priced.
But they objected to the fixed, pre-determined aspects of interest-based lending with its
inherent risk of lender exploiting borrower. In the early days of Islam, the dominant form of
finance consisted in a partnership between lender and borrower, based on the fair sharing of
both profits and losses - a logic similar to today’s venture capital where financiers link their
fate to the firms in which they invest, which according to T. Kuran was less dynamic than the
joint-stock company institution in Western capitalism (Kuran, 2006).
Yet, today Islamic banking includes developmental and social goals with profit-and-losssharing (PLS), or partnership finance, oriented towards cash-poor but promising
entrepreneurs, in stead of conventional, collateral-based lending, which favours established
businesses. Islamic finance has promised to benefit local communities and draw into the
banking system people who shun riba-based finance. In addition, banks were to contribute to,
as well as manage, zakat funds earmarked for a variety of charitable and social purposes. But
economic realities have framed the development of Islamic finance. The first Islamic banks
were committed to partnership finance - mudaraba (commenda partnership) and musharaka
(joint venture) - though most of their operations consisted of cost-plus operations such as
murabaha, where the bank would purchase the goods needed by the borrower, then resell
them to the borrower at a profit. Remuneration of deposits (current, saving or investment
accounts) was based on a profit-and-loss sharing logic: investment accounts were remunerated
based on the performance of specific investments by the bank; and holders of savings
accounts shared in the bank’s overall profits.
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Islamic financial institutions display today innovation and dynamism, it seems. The Islamic
commitment to private property, free enterprise and the sanctity of contracts has combined
with the Western notions of privatisation and deregulation, while respecting the zakat and
other religiously based redistribution schemes. Perhaps it is true that Islamic finance became a
tool for entrepreneurs to get around restrictive state regulations. In contrast to the 1970s, when
literal, legalistic and scholastic interpretations dominated, interpretation (ijtihad) today
focuses on making modern financial instruments more compatible with the basic Islamic
principles from the Koran and Tradition. The common perception that Islam is rigid and
fossilised is hardly in agreement with the theory of Islamic finance, which emphasises the
practical employment of adaptive mechanisms, including departures from tradition for reasons
of local custom (’urf), public interest (maslaha) or necessity (darura).
The reputation of Islamic banks was though tainted by the failure of Islamic Money
Management Companies (IMMCs) in Egypt in 1988 and by other scandals such as e.g. the
BCCI (Bank of Credit and Commerce International) collapse in 1991. People dismissed
Islamic finance as a passing fad associated with the oil boom. However, Islamic finance has
thrived with financial innovation, blurring distinctions between commercial banking and other
areas of finance. The downgrading of interest and the use of fees as a major source of revenue
for financial institutions allowed Islamic bankers to sidestep the controversial riba issue.
Deregulation fostered the creation of tailor-made Islamic products. Until the 1970s financial
institutions could sell only a narrow range of financial products. With the lifting of constraints
on products that could be devised to suit every need, religious or not, Islamic products could
be created. Thus, slicing and splicing makes it possible to separate the interest and principal
components of a bond, and handle them separately. Islamic finance, as promoted by the
Islamic Organisation, is spreading into the Occidental World. It has strengthened economic
activities for Moslems around the world, although sceptics exist about the possibility of
Islamic finance on a grand scale (Kuran, 2004). The Islamic Conference may be more
important through its unintended consequences than through its intended ones, to speak with
Merton. The political effects in the long-run from building mosques at many places, such as
e.g. with the Volga Tatars in Russia (KAZAN), cannot be underestimated.
EFFICIENCY OR VIABILITY OF REGIONAL GROUPS
It certainly seems to be the case that the Arab League is little effective in promoting real
outcomes. Why, then, does it continue its operations? Admitting the role of prestige, or lost
prestige, in defending the status quo of established organisations, one would still be inclined
to look for some benefits, however intangible, that leads the principals to pay for these kinds
of agents. Only symbolic gains could count for the Arab League, as it has been little
instrumental for achieving economic or political real outcomes. Things are entirely different
with regard to the GCC, which seems to operate according to the model of the European
Union (Lane, 2006), or at least aim at doing so in the future.
The Islamic Conference could only be effective when concentrating upon vague civilisation
goals, i.e. culture and Third Sector functions. The Islamic Conference helped promote a most
concrete and widespread outcome, namely Islamic finance. Yet, this phenomenon knows no
country borders and needs no regional apparatus to operate.
Organisations come and go. They are all man made devices and can only be viable as long as
the benefits outweigh the costs. Predominantly economic organisations seldom fail the test of
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viability, as their mission is clear from the outset. Predominantly defence organisation may
also be considered viable, because avoiding meaningless wars counts highly with most
governments. Viability may fail when organisations target diffuse cultural objectives, such as
religion or ethnicity.
CONCLUSION
The late 20th century and the early 21rst century have witnessed the regionalisation of the
state with the creation of regional groups of governments on all continents. In the Moslem
world one finds one regional organisation based upon language and another organisation
based upon religion. While the Arab League covers countries with several mutual borders, the
Islamic Conference includes countries that are wide apart geographically. The GCC is the
only compact organisation with a capacity to coordinate concretely. The basic logic of these
regional groups of states thus differs markedly.
One set of regional groups – NAFTA, MERCOSUR, SACU and the EU – concentrates upon
economic integration in order to promote a high level of economic growth as a response to the
Asian challenge. Another set of regional groups – ASEAN, CIS, ECOWAS, CACM – have
strong common foreign policy objectives. What, then, do the regional groups in the Moslem
civilisation maximise, if anything? Two of the Moslem organisations emphasize much culture
as the cement of the coordination, but it is more symbolic than the achievement of tangible
goals. Yet, also political symbolism counts, especially in the post-modern period. Thus, doing
lots of symbolic things, taking no action but merely refraining from doing the wrong things,
endorsing lofts principles, may reduce tensions among the Moslem countries, which after all
remain at a high level. I would suggest that the Arab League and the Islamic Conference are
more symbolic organisations than real ones. The GCC has a different logic altogether.
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SOME LITERATURE AND MATERIALS
Tim Niblock and Rodney Wilson, Political Economy of the Middle East, Edward
Elgar, 1999. Volume 3: Islamic Economics.
Bela Balassa (1985) Change and Challenge in the World Economy Basingstoke: Palgrave
Macmillan
Timur Kuran, “The economic system in contemporary Islamic thought: interpretations and
assessment”, International Journal of Middle Eastern Studies, Vol. 18, No. 2, 1986, pp. 135164. Reprinted in Niblock and Wilson.
Kuran, T., Islam and Mammon: The Economic Predicaments of Islamism (Princeton: Princeton
University Press, 2004)..
Kuran, T., "Modern Islam and the Economy," in New Cambridge History of Islam, vol.
6, gen. ed. Michael Cook, vol. ed. Robert Hefner (Cambridge: Cambridge University
Press, 2006).
Merton, R.K. (1968) Social Theory and Social Structure. New York: Macmillan.
Lane, J-E (2006) Globalisation and Politics. Aldershot: Ashgate
The Arab league: Alexandria Protocol (1944); The Charter of the Arab League (1945);
Cultural Treaty of the Arab League (1946); Joint Defence and Economic Cooperation Treaty
between the States of the Arab League (1950-52)
The Islamic Conference, Arab League and GCC:
http://www.oic-oci.org/
http://www.arableagueonline.org/arableague/index_en.jsp
http://www.gcc-sg.org/home_e.html
Economic Analysis and Evaluation of the Gulf Cooperation Council (GCC)
by Simon Koppers, 2004
The Organization of the Islamic Conference by Abdullah Al Ahsan, 1988
Islamic Banking and Finance: New Perspectives on Profit Sharing and Risk by Munawar
Iqbal (Editor), Interantional Conference on Islamic Economics and Banking 2000, by Loughb,
David T, Liewellyn (Editor), 2002
Through 2 Wars and Beyound: A Study of Gulf, Cooperation Council by Gulshan Dietl, 1992
The Gulf Cooperation Council: Serach for unity in a Dynamic Region by Erk R. Peterson,
1988
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The Gulf Cooperation Council: Moderation and Stability in an interdependent World by John
A. Sandwick, 1987
Struggle for the Arab World: Egypt's Nasser and the Arab League by Tawfig Hasou, 1986
The Foundation of the League of Arab States : Wartime Diplomacy and Inter-Arab politics,
1941 to 1945 by Ahmed M. Gomaa, 1977
The League of Arab States and Regional Disputes : A Study of Middle East Conflicts by
Hussein A. Hassouna, 1975