The Gulf Cooperation Council (GCC) is considering extending membership of the six-nation political and economic grouping to Morocco and Jordan as a means of contending with the region's evolving political landscape. Moving forward with this proposal would most notably lead to the creation of a new axis of geo-political influence in the Middle East. The main impetus for the proposed inclusion of Morocco and Jordan is now mainly political in nature. We do not foresee any market impact in the coming months as a result of this debate. Yet the economic implications of integrating two oil-importing states into the energy-rich bloc would be immense and demand careful assessment as to whether economic harmonization can be achieved.
Saudi Arabia, the United Arab Emirates, Kuwait, Qatar, Oman and Bahrain form the world's biggest oil-exporting region, and in addition to setting foreign policy objectives within the GCC, they are moving toward achieving mobility of labor, capital, and goods and services. It is unclear whether the GCC is considering full membership for one or both Jordan and Morocco, or whether it would create a new tier of membership focused on their mutual political and military interests. Although the timeline is not clear and the process of integrating Jordan and Morocco could take some time, an association agreement could be one way forward.
Neither Jordan nor Morocco holds substantial oil wealth, setting them apart from Gulf Arab states, which rely on oil exports for the majority of their public revenues. As net oil importers, Jordan and Morocco are more economically diversified and unlike their GCC counterparts, their governments face fiscal deficits this year, in a large part due to the rising cost of energy that has been a boon for Gulf Arab states. The two countries thus have a lot to gain from membership in the GCC, which would facilitate greater foreign direct investment, boost trade, commerce and labor mobilization. Agriculture, which accounts for around 16 percent of the country's GDP and employs around 42 percent of the working population, could offer additional opportunities for investment for the GCC in their search of agricultural investments abroad. Jordan's manufactured exports to the wider region, as well as beyond, could receive a boost from GCC investors. Investment in the tourism sector could also be set to gain in both Morocco and Jordan.
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