COMMISSION OF THE EUROPEAN COMMUNITIES 
Brussels, 22.11.1995 
COM(95) 541 final 
COMMUNICATION FROM THE COMMISSION TO THE COUNCIL 
IMPROVING RELATIONS BETWEEN THE EUROPEAN UNION AND 
THE COUNTRIES OF THE GULF COOPERATION COUNCIL (GCC) 

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Executive Summary 
Soon after the formation in 1981 of the Gulf Cooperation Council by Saudi Arabia, 
Kuwait, Bahrain, Qatar, the United Arab Emirates and Oman, the GCC took the initiative 
to seek a close relationship and free trade agreement with the European Community. The 
Community's response was positive given the economic importance of these countries and 
the strategic importance of the Gulf region. 
A Cooperation Agreement was concluded in 1988 and free trade negotiations began in 
1990. Since then the free trade negotiations have not progressed and results deriving from 
the Cooperation Agreement have been limited. The two sides held a Troika Ministerial 
Meeting in Granada on 20 July 1995 to give new political impetus and momentum to 
their relationship. 
The EU and GCC are closely inter-dependent economically. The GCC is the EU's 5th 
largest export market1 and the only one of the five in which the EU has a consistent trade 
surplus. In 1994 EU exports to the GCC totalled 19.3 billion ECU. The GCC accounts 
for 23.7% of EU oil imports, is the biggest single supplier and has the world's largest oil 
reserves as well as considerable gas reserves. The EU is both an important export market 
for the GCC and an important source of investment 
To ensure progress towards a dynamic, mutually beneficial and strategically important 
relationship, EU and GCC troika ministers in Granada made the following 
recommendations : 
to strengthen the EU-GCC political dialogue; 
to increase economic cooperation and propose solutions for unblocking the ongoing 
free trade negotiations; 
to develop instruments of cooperation which will promote increased reciprocal 
knowledge and understanding, especially in the cultural and scientific fields. 
These recommendations have been endorsed by the two sides and decisions should be 
taken on their implementation at the next EU-GCC Joint Council-Ministerial Meeting in 
Luxembourg in April 1996. 
The basis for strengthening the EU-GCC political dialogue is shared political and security 
interests. EU countries have played an important rôle in Gulf security during the Iran-Iraq 
war and in the liberation of Kuwait. The EU should affirm its continuing concern for 
GCC security in the framework of its Common Foreign and Security Policy. Strengthened 
political dialogue will also enable the EU and GCC to better appreciate and coordinate 
their support for the Middle East Peace Process and to discuss international issues of 
common interest. Twice yearly meetings at senior official level should be proposed. 
Importance of EU export markets (1994) USA, Japan, Central and Eastern Europe, ASEAN, GCC 
n 
EU-GCC economic interests are based on energy inter-dependence. This would be 
reinforced by increased EU-GCC cross-investments, vertical integration and industrial 
alliances. A free trade agreement would provide a long-term framework for such 
developments. A free trade agreement remains objectively of interest to the two sides. It 
would provide duty-free access for the EU to its 5th largest export market and duty-free 
access for GCC exports to an EU market of perhaps 500 million by early next century. 
European Commission and GCC officials should make every effort to unblock the 
negotiations in order to make concrete proposals to the Council and to EÙ-GCC ministers 
at the April 1996 meeting. Conclusion of a free trade agreement could be the single most 
important contribution to ensuring a close permanent EU-GCC relationship. Of course, 
the speed and the concrete steps with which we wish to achieve a Free Trade Zone, must 
always depend on careful examination of the advantages and disadvantages that could 
occur with each further step in those industrial sectors of both sides which must be seen 
as particularly affected. 
The draft Communication stresses the need to open new areas of cooperation and promote 
increased reciprocal knowledge and understanding. Strengthening political dialogue will 
contribute to these objectives, enabling a more substantial discussion of questions of 
human rights and democracy. A key new area would be decentralised levels of 
cooperation at civil society level. Programmes already established in the framework of 
EU Mediterranean policy could provide models. GCC participation in the Euro-Arab 
Management School in Granada and EU-GCC scientific cooperation in the fields of 
environment and energy, in particular solar energy, would be valuable. By opening a 
Delegation in Riyadh, accredited to each of the GCC countries and to the GCC 
Secretariat, the European Commission could contribute directly to strengthening 
cooperation, increasing the effectiveness of EU business cooperation instruments and 
promoting increased contacts and understanding. 
The successful implementation of these recommendations would lead to a qualitative 
improvement in EU-GCC relations. The GCC is a region of considerable strategic 
importance for the EU. A stronger region to region relationship should complement and 
assist the existing close bilateral relations between EU and GCC countries. It requires, 
however, that die GCC should continue to strengthen its regional, economic, political and 
military cooperation. Continuing EU emphasis on relations with the GCC at the regional 
level does not mean that parallel bilateral relations with individual GCC countries should 
not also be pursued. 
The Commission recommends that the Council should reaffirm the strategic importance 
of a strong GCC regional group and its commitment to the development of a strong EU-
GCC relationship. The Commission will, in accordance with the recommendations of the 
Granada Troika Ministerial Meeting and its negotiating directive, seek to conclude the 
free trade negotiations and to make proposals for expansion of EU-GCC cooperation and 
regional, decentralised programmes of cooperation. 
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IMPROVING RELATIONS BETWEEN THE EUROPEAN UNION AND 
THE COUNTRIES OF THE GULF COOPERATION COUNCIL (GCC) 
l. INTRODUCTION 
Historically, soon after the formation in 1981 of the Gulf Cooperation Council by the 
original and present 6 member countries (Saudi Arabia, Kuwait, Bahrain, Qatar, United 
Arab Emirates and Oman), the GCC took the initiative to establish a close relationship 
and free trade agreement with the European Community. The Community's response was 
positive, recognising the vital importance of these countries for the supply of oil to its 
economy and, more widely, of their role as energy suppliers to the international economy. 
The Community also recognised the significance of a regional grouping of these countries 
for promoting stability in the strategically vital Gulf area. 
The institutional framework for EC-GCC relations was provided in 1988, when the 
European Community and member countries of the GCC concluded a Cooperation 
Agreement. The EC-GCC Cooperation Agreement was the first of a new generation of 
EC international agreements which included provisions for complementing and 
strengthening relations by providing for the negotiation of a free trade agreement. With 
the conclusion of the Cooperation Agreement the two sides recognised the objective 
importance of their relations based on economic and energy interdependence. 
Confirming the EC's commitment to developing free trade relations with the GCC, the 
Commission obtained from the Council a first negotiating directive in 1990. The Gulf 
War in 1990/91 was a traumatic experience for the GCC countries. It prompted 
immediate European solidarity and participation in the international alliance which 
enabled the liberation of Kuwait. Following the Gulf War, at the request of the GCC 
countries, the European Community modified its first negotiating directive to provide 
more balance and a reduced transitional period. The second negotiating directive included 
comprehensive provisions on tariff dismantling and transitional measures to take account 
of particularly sensitive sectors in the EU, and of infant industries in the GCC. 
However, since the adoption of the second negotiating directive, the negotiations for a 
free trade agreement have not progressed at all. The GCC side have not offered a 
comprehensive response to the EC proposals. In April 1993, they insisted instead that the 
free trade negotiations should concentrate first on priority sectors and put forward 
proposals for the energy sector, the effect of which would have limited the EC ability to 
introduce a carbon energy tax, a proposal which the GCC side considers would harm their 
energy interests. 
In parallel to the free trade negotiations, concrete results deriving from the Cooperation 
Agreement have been slow and limited to: 
• Cooperation in the field of customs and from this year in the field of standards. 
• Energy cooperation with the holding of a number of EC-GCC Energy Working 
Group meetings, an EU-GCC Energy Symposium in Muscat in April 1994, and the 
EU-GCC Ad*Hoc Group's Joint Report on Interrelated issues of Energy and the 
Environment. 
• EC-GCC Industrial Conferences (Granada, 1990; Doha, 1992, and in Muscat from 
16-18 October 1995) 
• Environment cooperation with the setting up of a marine and wildlife sanctuary in 
Jubail (Saudi Arabia) 
This year's scheduled Joint Council-Ministerial Meeting was postponed and a first-eyer 
EU-GCC Troika Ministerial meeting was held in Granada on 20 July 1995 to assess 
relations between the two groups. In agreeing to hold this meeting, the two sides 
recognised, in effect, that special attention was required if new political impetus and 
momentum were to be given to their relationship. 
2. THE IMPORTANCE OF EU-GCC RELATIONS 
The original premises of EU-GCC cooperation, namely a high degree of economic and 
energy inter-dependence, have not changed. 
2.1. The importance of the GCC for the EU 
Despite a small total population of just over 21 million inhabitants, the GCC is the 5th 
largest market for EC exports1, larger than China and the CIS and the only one of the 5 
with which the EC has, consistently, an export surplus. Total EC-GCC bilateral trade 
reached over 30 billion ECU in 1994. EC exports amounted to 19.3 billion ECU and the 
EC trade surplus was 7.9 billion ECU. It is important to recognise, however, that since 
crude oil represents 70% of EC imports from the GCC, the level of the EC trade surplus 
is to a large degree a reflection of low oil prices. The weakness of the US dollar 
compared to EC currencies is another factor influencing the size of the EC trade surplus. 
Oil continues to be the most important component of EC energy consumption: 45%. In 
1994 the GCC countries were the single most important source of EC oil supplies, 
accounting for 23.7% of total imports. EC external energy dependence is estimated to 
increase from 50 to 60% by 2010. By then, oil and gas will be the most important 
components of energy consumption. GCC countries have the largest oil reserves in the 
world, 47%, and 14.5% of world natural gas reserves. EC energy dependence on the GCC 
in the medium term is therefore bound to increase. 
2.2 The importance of the EUfor GCC countries 
Although Asia is the single most important destination for GCC oil exports, the EC is the 
second most important market, accounting for some 15% of GCC oil exports in 1992. 
Whereas some minor spot LNG sales to some Member States took place recently, the 
GCC does not yet supply natural gas to the EC on a contractual long-term basis, but as 
EC demand for gas increases, GCC gas production plans will inevitably lead to 
significant GCC gas exports to the EC in the future. Overall, and leaving aside the 
question of future EU enlargement, the importance of the EC energy market for the GCC 
should increase in relation to increasing EC external energy dependence. 
In terms of diversification of GCC exports, the EC absorbs a major share of GCC exports 
of refined petroleum products, petrochemical products and aluminium. 
EU Member States are also the second most important foreign investor in the GCC, ahead 
of Japan and second only to the US. In contrast to US investment, which is concentrated 
in one sector, petrochemicals, EU Member States investment is widely spread through 
industrial sectors. For example, in Saudi Arabia the EU Member States are the principal 
foreign investor in 6 out of 7 industrial sectors and second in the one sector, 
petrochemicals, in which the United States leads. On the other hand, the EU Member 
States are the second destination of GCC outward investment. While there is considerable 
direct GCC foreign investment in the Member States, in particular in refining and 
distributing automotive fuels, the bulk of GCC investments in the EU Member States are 
portfolio investments in deposits, bonds and equities. 
3. EU-GCC INTER-DEPENDENCE AND THE NEED FOR A STRONGER 
RELATIONSHIP 
As the above paragraphs indicate, the key word in describing EU-GCC energy, trade and 
investment relations is inter-dependence. An annex provides full statistical details. But 
close relations cannot be based simply on a strong trade and investment foundation, 
although this is a vital pre-requisite. To ensure progress towards a dynamic, mutually 
beneficial and strategically important relationship, it is necessary that EU-GCC relations 
should be based on shared political and security interests, a framework for their strong 
trade, energy and economic interests, good cultural relations and cooperation between 
civil societies. The Granada Troika Ministerial meeting of 20 July 1995 addressed all 
three areas and made the following recommendations : 
• to strengthen the EU-GCC political dialogue; 
• to increase economic cooperation and propose solutions for unblocking the ongoing 
free trade negotiations; 
• to develop instruments of cooperation which will promote increased reciprocal 
knowledge and understanding, especially in the cultural and scientific fields. 
These recommendations were endorsed by EU and GCC Foreign Ministers meeting in 
New York on 29 September 1995. The two sides are now committed to decide on the 
implementation of these recommendations on the occasion of the 6th EU-GCC Joint 
Council-Ministerial Meeting which it has been agreed to hold under Italian Presidency 
on 22-23 April 1996 in Luxembourg. 
It is the purpose of this Communication to review these recommendations and prepare 
for their successful implementation. 
4. STRENGTHENING THE EU-GCC POLITICAL DIALOGUE 
Events in the political and security spheres in recent years ought, if anything, to have 
strengthened the objective, economic basis for a stronger EU-GCC relationship. During 
the Iran-Iraq war EU countries helped ensure, by their naval presence, that the Gulf, 
through which 45% of world oil supplies pass, remained secure for shipping oil to export 
markets. More dramatically, in 1990-91, the important role of EU countries in the US-led 
alliance to liberate Kuwait from Iraqi invasion demonstrated Europe's commitment to 
GCC security and independence. Joint EU-GCC support for the Middle East Peace 
Process, and a common desire to see a balanced approach to resolving the most 
dangerous and recurrent cause of conflict in a region directly bordering on GCC territory, 
ought also to have confirmed the underlying convergence of EU-GCC political and 
security interests. 
One of the shortcomings of the EU-GCC relationship, however, has been the absence of 
a forum, apart from annual, formal ministerial meetings, where these common interests 
could be acknowledged, discussed and effectively developed. On the EU side there is, 
correspondingly, the absence of an appropriate place for relations with the GCC in the 
Common Foreign and Security Policy (CFSP). Lack of active affirmation at an EU level 
of interest in GCC security has led to the impression in the GCC that the United States 
plays an almost exclusive role in the political and security spheres. This impression is 
erroneous. Experience has amply demonstrated, that no international alliance in support 
of the GCC would be complete or effective without the backing of EU countries. Lack 
of active affirmation of EU interest in GCC security has also helped companies in the 
United States to benefit economically from the perceived US position as sole champion 
of GCC security, not only with regard to military sales but also in key sectors such as 
civil aviation and telecommunications. 
The establishment of a regular, senior-official level, reinforced "political dialogue", as 
recommended by the EU-GCC Ministerial Troika in Granada on 20 July 1995, should 
therefore provide an opportunity for both sides to better appreciate the extent of their 
shared political and security interests. The EU should in this context consider GCC 
security concerns. Events of the past decade have identified the GCC-Iran-Iraq triangular 
relationship as one of the key issues for international security. The EU should therefore 
use the machinery of CFSP to study the issues and examine them with its GCC partners 
in the framework of the strengthened EU-GCC political dialogue. 
Another area in which both sides should benefit from a reinforced political dialogue is 
the Middle East Peace Process. The important roles played by the EU and the GCC in 
the Peace Process, notably the economic aspects2, demonstrate that a new Middle East 
region requires an active economic role by both the EU and the GCC. GCC energy and 
capital combined with EU Member States private investment and the large EU market 
will be decisive elements in determining the economic future of the region. These roles 
and shared interests should be subject to much greater discussion and exchange and, 
where possible, co-ordination. The reinforced political dialogue should greatly assist such 
a process. 
A further area in which the EU should seek to benefit from a reinforced EU-GCC 
political dialogue is in relation to EU Mediterranean policy. As the above discussion of 
security issues underlines, an EU vision to promote security and stability in the 
Mediterranean should not stop at the frontier of Saudi Arabia and the edge of the Arabian 
Peninsula. Equally, GCC political and security interests cannot be confined exclusively 
to the geographic area of the Gulf. The GCC countries are as much interested in the 
Mediterranean area between them and Europe as Europe is. They stand to gain as much 
from our efforts to create a vast Euro-Mediterranean free trade area as Europe and the 
Mediterranean countries themselves. Strengthened political dialogue will enable the two 
sides to better appreciate their common interests in the Mediterranean area. 
The importance of the GCC in the political field is not confined to the Gulf and the 
Mediterranean regions. The GCC countries play a major role in international organisations 
such as OPEC and the Islamic Conference Organisation. They have important energy 
markets in Asia. They have been actively interested in developments in Centrai Asia s nee 
the end of the Soviet Union and they have followed with great concern events in form r 
Yugoslavia. It is for this latter reason that the EU wishes to enlist their support for the 
reconstruction of Bosnia. All of these issues could be usefully discussed in the framework 
of a strengthened political dialogue. 
Finally, a strengthened political dialogue would enable the two sides to discuss questions 
of human rights and democracy which are of importance both at the international level 
and the level of relations between the EU and GCC. Discussion of these questions and 
others such as prevention of terrorism is essential if the two groups are to establish a 
closer political relationship. Frank and constructive discussion would also promote 
increased reciprocal knowledge and understanding as recommended by EU and GCC 
ministers in Granada. 
To implement the recommendation to strengthen the EU-GCC political dialogue the EU 
should quickly propose modalities for holding twice-yearly meetings at senior official 
level to discuss all aspects of EU-GCC and international political and security issues of 
common interest. 
The EU and the GCC are the principal financial supporters of the Peace Process 
5. STRENGTHENING THE FRAMEWORK OF EU-GCC ENERGY AND 
ECONOMIC INTERESTS 
By virtue of its importance to national economies and the international economy 
generally, oil is not just a commodity like any other. Its key role requires that EC-GCC 
energy inter-dependence should be accorded its full significance. Because EC-GCC 
relations have not developed the full potential of early aspirations, the significance of this 
inter-dependence has been sidelined in recent years by other considerations. The GCC 
countries have tended to consider that by means of its European Energy Charter initiative, 
the EC and its Member States are giving priority in its external energy policies to Russia 
and the former Soviet Union. The EC has tended to consider GCC objections to issues, 
such as a possible EC-carbon energy tax, as concerns with the shadows rather than the 
substance of energy inter-dependence. 
Energy policy is intimately connected with economic policy. For example, there is no 
doubt that the underlying realities of energy inter-dependence would be reinforced by 
greater cross-investments, with more GCC investment in EU refining and downstream 
activities, accompanied by EU countries investment in GCC upstream and downstream 
energy and energy-related activities. Already important downstream investments in 
Europe, in particular in the refining industry, have been made by Kuwait, Saudi Arabia 
and the United Arab Emirates. Furthermore, European companies have carried out 
upstream investments in several GCC countries (UAE, Qatar and Oman, in particular) and 
in the refining industry in Saudi Arabia. However, this process would be greatly assisted 
by an improved framework for EC-GCC energy and economic relations. 
Regarding future trade trends, GCC countries are as concerned today, or possibly even 
more concerned, to diversify their industrial base and prepare for the post-oil age as they 
were when taking their initiative to approach the EC for a preferential trade agreement 
in the mid-1980s. An EC-GCC free trade agreement would give duty-free access for the 
products of GCC industrial diversification to a huge, geographically close market of some 
500 million inhabitants by early next century. 
For the EC, given the continuing importance of the GCC market as described above, a 
free trade relationship is as much in our interest today as it was at the time of the 
adoption of the first negotiating directives in 1989. It is obviously of interest to secure 
duty free access for EC exporters in the 5th most important EC export market. In terms 
of reciprocal concessions which would be made to secure a free trade agreement, the 
basic considerations are as follows: 
On a larger volume of trade, EC exporters pay GCC duties which are on average 
higher than EU duties, whereas 
79% of GCC exports to the EC enter duty free under MFN arrangements and a 
further 15% could currently benefit from GSP advantages. 
Finally, for both the EC and the GCC, a free trade relationship would provide their 
economic operators a permanent framework for developing cross-investments, vertical 
integration and industrial alliances which it is clear from experience that the EC-GCC 
Cooperation Agreement alone does not provide. 
The key to strengthening the framework of EC-GCC economic interests therefore could 
lie in the conclusion of a free trade agreement. Such an agreement could be, objectively, 
in the interest of the two sides. As to the World Trade Organisation the Community 
would ensure that such an agreement would comply with its requirements and in 
particular ensure that it would cover essentially all trade between the two parties and all 
sectors. Since the harmonised reduction of duties on petro-chemical products in the 
Uruguay Round, the concerns of this important European industry should also be more 
easily met. Finally, with the progressive graduation of GCC countries from the EC's 
Generalised System of Preferences, it is urgent to avoid what could become, in future, 
increasing trade frictions between the two groups. 
Among GCC countries, Kuwait, Bahrain and Qatar are members of the WTO. The UAE 
are still negotiating their accession. Saudi Arabia has applied for WTO membership and 
Oman has declared its intention to do so. 
The group of Commission and GCC experts proposed at the Granada meeting to study 
the unblocking of the ongoing negotiations should make every effort to overcome the 
obstacles which have so far prevented progress in these negotiations. Concrete proposals 
should be finalised by April 1996 to enable decisions by ministers at the 6th EU-GCC 
Joint Council. If these proposals lead to the conclusion of a free trade agreement, this 
would be perhaps the single most important contribution possible to ensuring a close 
permanent EC-GCC relationship. Of course, the speed and the concrete steps with which 
we wish to achieve a Free Trade Zone, must always depend on careful examination of 
the advantages and disadvantages that could occur with each further step in those 
industrial sectors of both sides which must be seen as particularly affected. 
6. PROMOTING INCREASED RECIPROCAL KNOWLEDGE AND 
UNDERSTANDING 
The GCC countries have long enjoyed good bilateral relations with EU Member States 
and of course a number of GCC countries gained their independence from the United 
Kingdom just over 30 years' ago. Despite these advantages, EU-GCC bilateral and 
regional relations have not promoted sufficient contacts and exchanges to accompany and 
assist the development of official links between the two regions. In particular, the younger 
generations are not fostering bonds of contact and understanding which previous 
generations have done by virtue, mainly, of shared historical and educational backgrounds 
and experience. 
The EU-GCC Troika Ministerial Meeting in Granada therefore rightly stressed the need 
to open new areas of cooperation and promote reciprocal knowledge and understanding. 
The scope for action at the EC level to correct these deficiencies is, of course, limited. 
Bearing in mind the principle of subsidiarity and the considerably greater opportunities 
for action at national level, it is mainly for Member States to adopt policies to expand the 
scope of contacts and exchanges with GCC countries. 
Nonetheless, at the EU level, the Granada recommendations will be significant. As 
mentioned above in Section 4, strengthening political dialogue will contribute to these 
objectives by a more substantial discussion of human rights and democracy. 
A commitment to human rights and fundamental freedoms is at the heart of EU policy 
world-wide. The EU believes that the espousal of international standards of human rights 
and their respect are essential for long-term social and political stability. In this 
framework, GCC countries should be encouraged to become signatory parties and fully 
apply international instruments in relation to human rights. The EU is ready to help the 
GCC countries to establish a civil sociey founded on the primacy of law in conformity 
with the Declarations and Action Programmes of United Nations conferences such as 
Vienna (June 1993), Copenhagen (March-April 1995) and Beijing (September 1995). 
These subjects have not been adequately discussed at ministerial level and there has 
tended to be a dangerous silence on sensitive matters which, if not properly handled, 
could affect the progress of relations. More openness and transparency on these issues 
would help counter reflexive European media and parliamentary critics of GCC practices. 
The EU should seek through its relations with the GCC countries, which have a special 
position in the Islamic world, to obtain better insight and judgement on how traditional 
Islam can accommodate modern concepts of human rights. The official political dialogue 
should also be used for understanding and appreciating democratic and constitutional 
developments. The breadth and diversity of EU experience could be valuable to GCC 
countries which are having to realise constitutional changes which have taken decades and 
longer in European systems. 
But a key new area of cooperation to which Troika ministers referred in Granada was not 
at the official level but at decentralised levels of cooperation, involving civil society and 
non-governmental organisations. The possible participation of GCC countries in some 
horizontal programmes of cooperation on the model of those established for the 
Mediterranean countries could be very positive. They could lead to greatly increased 
grass root contact and cooperation in education, training and youth, as well as science, 
local government and press and television which is an essential accompaniment to the 
promotion of good official relations. This type of regional, decentralised cooperation 
would undoubtedly contribute to better regional relations and understanding. 
The GCC countries should also be natural partners for collaborating with the Euro-Arab 
Management School in Granada. Economic development and diversification of GCC 
economies is producing the need for an increased supply of well-trained managers. 
Moreover, rapid GCC population growth makes it imperative to create productive job 
opportunities for new generations. 
Information and communication technologies constitute a vital sector for modern 
economies and key conditions for the emerging information society. They are of 
particular relevance for the GCC countries due to the high technological level they have 
already reached and the challenges they face for the setting up of a post-oil economy. 
Such areas should offer a new field of cooperation focusing on the dialogue of the 
premises of the information society and aiming at the realisation of pilot projects to 
demonstrate the feasibility and the concrete benefits of the applications of these new 
technologies. 
The intention of Troika ministers in Granada to increase scientific cooperation merits 
special attention. GCC scientific capacity is already significant in several sectors but 
could be strengthened in cooperation with European scientific institutions. Common 
interests are numerous, ranging from global warming to urban and industrial pollution. 
Energy related subjects could be prominent, including renewable energy. The Arabian 
peninsula offers among the best available sites world-wide for the production of solar 
energy in the 21st century. Consequently, there are vast untapped opportunities for future 
cooperation between Europe and the Gulf in the field of solar energy. Scientific and 
technological cooperation between the EU and the GCC should start as of now to make 
these new resources fully available in due time. The Institute for Prospective 
Technological Studies in Seville could provide the framework for this cooperation. 
Finally, it is essential to underline the fact that the pursuit of sustainable development is 
a factor underpinning EU relations with all third countries (or regional groupings). More 
specifically, four of the six GCC states (except UAE and Qatar) have ratified the 
Convention on Global Climate Change, which calls - inter alia - for a reduction in global 
emissions from fossil fuels. There is therefore a direct link between the GCC states' 
principal means of achieving economic growth - the export of oil - and the concern they 
and the EU share (with others) for the global environment. All GCC states formed part 
of the consensus at the Rio Conference in 1992 which adopted the Rio Principles. 
Topics in the field of the environment where preliminary discussions indicated that the 
mutual interest could be further explored include marine pollution, hazardous waste 
management, nature protection, air pollution and international environmental cooperation 
policies. 
If a joint commitment exists to cooperate together in these regional, decentralised, 
scientific and other programmes it should not be difficult for the EU and GCC to work 
out modalities and methods of co-financing as recommended by Troika ministers in 
Granada. The EU has experience of cooperating in such programmes with countries which 
have similar or higher levels of per capita income. Shared experience in these and similar 
EC-GCC cooperation activities should help significantly to consolidate and extend 
official-level relations. 
The European Commission could itself make an important contribution to strengthening 
EC-GCC cooperation and promoting increased contacts and understanding by opening a 
Delegation in Riyadh, capital of Saudi Arabia and seat of the headquarters of the 
Secretariat of the Gulf Cooperation Council. A Commission Delegation would be 
accredited to the governments of all six GCC countries. 
In this third, general area, implementation of the Granada recommendations provides 
many possibilities : 
• promoting mutual understanding by discussing questions of democracy and human 
rights in the strengthened official political dialogue; 
• including the GCC countries in EC programmes of regional, de-centralised 
cooperation to increase contacts and grass roots cooperation in education, training 
and youth matters; and in science, local government, business education and the 
media. 
10 
• improving transport links and strengthening cooperation; 
• scientific cooperation, especially in areas xsi common interest such as energy. 
v cooperation in the field of management training, both private and public, through 
initiatives such as die Euro-Arab Management School; 
• as a result of establishing a Commission delegation in the GCC region, the EC could 
effectively promote these programmes of cooperation and effectively introduce a 
number of instruments to strengthen economic cooperation such as the Business 
Cooperation Network (BC Net), Bureau de Rapprochement des Entreprises (BRE) 
and the European Community Investment Partners (ECIP) 
7. TOWARDS A QUALITATIVE IMPROVEMENT IN RELATIONS 
The intention of E1MSCC Troika ministers in Granada in making recommendations to 
strengthen political, economic and cultural and scientific relations was to provide for a 
qualitative improvement in EC-GCC relations. Indeed, strong economic inter-dependence 
and shared political and security interests, support the view that the two regions should 
develop, over time, a strong, strategically important relationship. 
This view of an evolving, strong relationship is not one which puts in question the 
present, pre-dominant role of the United States in GCC military security. This is a fact. 
It should not obscure, however, the role which Europe has played, and will, no doubt, 
continue to play in the broader context of GCC security in particular economic security. 
It is also a fact that since the original EC-GCC commitment to establish close relations, 
the EU is giving new emphasis to relations with countries to the south. This new 
emphasis in EU external policy, a direct result of the end of the Cold War and a desire 
to balance the EUs East and South policies, implies increased importance for the EU of 
the GCC. The view of an evolving, strong EU-GCC relationship continues, of course, to 
be most firmly based on ûie present and future importance of EU-GCC economic and 
energy inter-dependence. 
The above analysis has shown, however, that an important relationship, such as the EU-
GCC relationship, cannot be taken for granted and left to take care of itself. All important 
relationships must be worked at and given the correct attention and priority by both sides. 
In the case of the EU and GCC member states, there has been a tendency to look at the 
trade figures and at bilateral relations and to leave everything at the regional level to take 
care of itself. The EU-GCC relationship provides complementary, regional added value 
to bilateral relations. But if regional relations are neglected, or become the source of 
irritants, then region-to-region relations can spill over and have harmful effects on 
bilateral relations. 
Of course, the development of the region-to-region relationship depends on the 
development of the regional structures and competences of the two sides. It is therefore 
essential that the process of GCC cooperation and integration continues as its member 
countries have resolved. An economically, politically and militarily strong GCC, 
constituting a firm, independent pillar in the sensitive and strategically important Gulf 
area security system is of major interest to the European Union. A weak and divided 
GCC would add dramatically to the potential for instability in the area and the potential 
for interference by the GCC's powerful neighbours. In the context of the follow-up to the 
11 
Granada Troika Ministerial Meeting and the desire for a qualitative improvement in 
EU-GCC relations, it is, therefore, important that the GCC should go on with its policy 
commitments to strengthen integration and the role of the GCC. This does not mean that, 
in parallel, bilateral relations with each of the Gulf countries should not be pursued and 
encouraged according to each country's specific characteristics. 
Implementation of the recommendations of the Granada Troika Ministerial Meeting will 
constitute a test case for EU-GCC relations. Reinforcing the political dialogue, finding 
solutions to problems obstructing progress towards strengthening economic relations and 
developing new cooperation and a meaningful cultural dimension to relations, is a 
realistic agenda. It is in line with the approach followed in the Euro-Mediterranean 
partnership framework. It does not require, either, a shift in GCC policies or orientations. 
If the agenda is implemented, it would provide for the desired qualitative improvement 
in relations. The EU should therefore make a maximum effort to ensure that, in 
accordance with the recommendations of the Granada Troika Meeting, the relevant 
decisions can be prepared for a successful 6th Joint Council-Ministerial Meeting. 
8. CONCLUSIONS AND RECOMMENDATIONS 
In the light of the above review of EU-GCC relations, the Commission recommends that 
the Council should: 
• reaffirm the strategic importance of a strong GCC regional group capable of playing 
a progressively more important role in the economic, political and security spheres; 
• reaffirm its commitment to the development of strong, mutually beneficial EU-GCC 
relations; 
• confirm the need to include the GCC countries in the EU's global strategy for 
improving relations with partners from other regions and in particular with the 
Mediterranean area; 
• reaffirm its commitment to follow-up and implement successfully the 
recommendations and conclusions of the Granada Troika Ministerial Meeting and 
thereby achieve a qualitative improvement in EU-GCC relations; 
• in particular, the Council should agree to reinforce EU-GCC ministerial level 
political cooperation by holding twice-yearly meetings at senior official level to 
discuss all aspects of EU-GCC, and international, political and security issues of 
common interest. 
For its part, the Commission will : 
• in accordance with the Granada Troika Ministerial meeting recommendations and its 
negotiating directive, identify with its GCC counterparts obstacles to progress in the 
ongoing EC-GCC free trade negotiations with a view to re-launching these 
negotiations, ensuring that a resulting agreement would be in conformity with the 
requirements of the WTO; 
12 
• in liaison with its GCC counterparts and in the framework of the 1989 Cooperation 
Agreement, make proposals for a significant expansion of cooperation in areas of 
mutual interest; 
• make proposals for increasing contacts and understanding in the fields of regional, 
decentralised cooperation, scientific and management cooperation and programmes 
to strengthen economic cooperation. 
• study the suitability of presenting to the Council a complementary mandate for 
negotation concerning services in line with the OMC dispositions after having carried 
out the appropriate research into the legal and economic impact on the Free Trade 
Zone and taking into account the offers presented by the GCC within the GATS 
framework. 
The Commission will keep the Council fully informed of its actions in following up the 
recommendations of the Granada Troika Ministerial Meeting, including developments in 
the free trade negotiations and make appropriate proposals in time for the preparation of 
a successful 6th EU-GCC Joint Council-Ministerial Meeting. to be held on 
22-23 April 1996 in Luxembourg. 
***** 
• à i A1 id i iCAL, AiS i\ JH.A 
1. EU-GCC Trade 
EVOLUTION OF EU-GCC TRADE: 
\wmmw^M 
W&smmmm 
wmm^mm isfëmmmm ïmmmmà 
mmmmm mmmmmà [é&immmà mmmmm 
\WS&mmma msmmmm mmtèxS^wf^l 
19.8 
14.7 
13.2 
12.9 
15.4 
13.9 
16.8 
18.3 
19.6 
19.3 ::>:::>::Iinfip0ei^:fro:r»:<^iC5: 
16.4 
12.3 
10.1 
8.7 
11.7 
11.8 
13.4 
12.3 
12.3 
11.3 •mï^&mfà®: 
3.3 
2.3 
3.1 
4.1 
4.1 
2.0 
3.3 
6.0 
7.3 
7.9 
The quantitative significance of our trade relations is coupled with a considerable trade surplus 
which was of 7.9 Billion ECU in 1994. For every ECU we imported from the GCC 
(predominately crude oil) we exported 1.7 ECU of manufactured goods to the GCC region. 
EVOLUTION OF EU SURPLUS WITH THE GCC: 
Gulf War 
The GCC is the EtTs largest trading partner in the Arab world totalling almost 40% of our trade 
with Arab countries and 4% of total EU's exports to third Countries. 
COMPARISON BETWEEN EU'S EXPORTS TO THE GCC AND OTHER ZONES OR 
COUNTRIES: 
GCC 193 
China 12.5 
Maghreb 12/7 
Mercosur 14.8 
Ex-Soviet Union 15JJ 
* * * 
STATISTICAL ANNEX 
2. The EU-GCC Energy Interdependence 
Half of EU's energy is imported and two thirds of those total imports are oil. More than 20% of 
oil imports are provided by the GCC. This means that approximately 10% of EU's energy 
consumption is supplied by GCC countries. 
However, GCCs share in EU's energy consumption is forecast to increase because: 
1. European. Union ,energy production will decline by more than 10% by 2010 increasing 
import requirements from the present 50% to 60% of EU's energy consumption; 
2. In all scenarios oil will retain the highest share of energy consumption; 
3. The GCC holds 46% of the world's proven oil reserves. 
EU'S SUPPLIERS OF CRUDE OIL: 
Rest of the world 
22% 
Norway 
18% 
EU-GCC interdependence is reinforced by the fact that the EU is the closest destination of 
GCCs oil exports and the largest importer of GCC oil after Asia: 
é DESTINATION'OF ENERGY EXPORTS FROM THE GULF REGION: 
EU l 25.7%"" 
US 11.3% 
Japan 23.7 % 
Arab countries 9% 
Asia exc. Japan and China 19.1 % 
Réf.: DGIB/A/4.AB.GCC.35.07 
STATISTICAL ANNEX 
3. GCC Member States 
Population (Milion) 
GDP (Million USD) 
Per Capita Income 
Unemployment 
Exports(Million USD) 
Imports(MiIlion USD) 
Balance(MiIlion USD) 
Exports to 
Imports from Saudi Arabia 
16 
108,000 
11,000 
6.5% 
39,000 
26,000 
+12,000 
US 21% 
Japan 18% 
Singapore 6% 
France 6% 
Korea 5% 
US 18% 
UK 12% 
Japan 10% 
Germany 5% 
France 5% _ Kuwait 
—» L75 
25,000 
15,100 
Negligible 
11,800 
6,800 
+5,000 
France 16% 
Italy 15% 
Japan 12% 
UK 11% 
US 35% 
Japan 12% 
UK 9% 
Canada 9% Bahrain 
0.5 
4,600 
12,000 
13% 
3,300 
3,500 
+200 
Japan 13% 
UAE 12% 
India 10% 
Pakistan 8% 
Singapore 6% 
Saudi Arabia 42% 
US 14% 
UK 7% 
Japan 5% 
Germany 4% Qatar 
0.5 
8,800 
17,500 
NA 
3,000 
2,100 
+900 
Japan 61% 
Brazil 6% 
Korea 5% 
UAE 4% 
Singapore 3% 
Japan 14% 
UK 12% 
US 12% 
Germany 9% 
France 5% UAE 
2 
63,800 
24,000 
Negligible 
21,329 
20,430 
+899 
Japan 39% 
Singapore 5% 
Korea 4% 
Iran 4% 
India 4% 
Japan 14% 
UK 9% 
US 8% 
Germany 6% Oman 
2 
16,400 
10,000 
NA 
5,488 
4,506 
+981 
UAE 30% 
Japan 27% 
Korea 10% 
Singapore 5% 
Japan 20% 
UK 19% 
UAE 14% 
US 7% 
Source: Eurostat, official GCC statistics, International Energy Agency, Green Paper for a EU Energy Policy 
Vt 
/G 
ISSN 025+1475 
COM(95) 541 final 
DOCUMENTS 
EN 11 
Catalogue number : CB-CO-95-633-EN-C 
ISBN 92-77-96665-3 
Office for Officiai Publications of the European Communities 
L-2985 Luxembourg