The Cipher Brief sat down with Marcelle Wahba, President of the Arab Gulf States Institute in Washington and former U.S. Ambassador to the United Arab Emirates, to discuss internal dynamics within the Gulf Cooperation Council. According to Wahba, GCC countries view Iran as their “main international security challenge, but pursue a range of approaches based on varying priorities.” Furthermore, Wahba said cooperation among GCC countries is primarily in defense as “there is not great policy coordination in trade or financial regulation among the GCC states.”

TCB: What role has the Gulf Cooperation Council played in promoting regional stability in the Arabian Gulf? Has the establishment of the GCC led to an increase in coordination and cooperation among GCC member countries, particularly in the security realm?

Marcelle Wahba: In 1981 the Gulf Arab countries, excluding Iraq, founded the GCC to promote their security and economic interests. This was following the 1979 Islamic Revolution in Iran and amid the Iran-Iraq War, underscoring the potential threats facing Gulf states from larger neighbors and regional instability.

The GCC countries are essentially status quo-oriented monarchies, and regional stability is a core goal. The United States has long served as the great-power guarantor of Gulf stability and security. Several GCC countries host large U.S. military installations and maintain vital bilateral ties with Washington, in addition to the multilateral GCC-U.S. partnership.

In 1984, the GCC founded the Peninsula Shield Force, based in Saudi Arabia, and now comprising 40,000 soldiers in two brigades. It is oriented toward rapid response and combatting external military aggression against, and internal destabilization within, GCC states. Its only significant deployment has been the 2011 intervention in Bahrain. Several GCC countries, including Saudi Arabia and the UAE, have also been involved in the military intervention in Yemen since March 2015.

A 2000 Joint Defense Agreement commits GCC members to the principle that “an attack on one is an attack on all.” Washington has promoted the development of a united command and missile shield, but GCC military integration and interoperability remains limited.

Over time, the GCC has enhanced harmonization and coordination. Agreements on economics and trade (2001), customs and external tariffs (2003), and a common labor market (2008) have been adopted but others, including a unified currency, have stalled. A 2013 Saudi proposal for the political unification of all Gulf states was blocked by Oman, reportedly with the support of several other members.

TCB: How has the GCC worked to counteract Iran’s provocative behavior in the region?

MW: GCC countries regard Iran as their main international security challenge, but pursue a range of approaches based on varying priorities. Saudi Arabia and the UAE are leading the military intervention in Yemen against the Iranian-supported Houthi rebels and their allies. Riyadh, along with Qatar and Turkey, has been a main sponsor of Syrian rebels fighting the Assad regime, which is among Iran’s most significant strategic assets, along with Hezbollah, a group that has contributed thousands of fighters in support of the regime.

GCC countries were initially enthusiastic participants in the coalition against the Islamic State in Iraq and the Levant. As the campaign unfolded, however, they began to fear that it was empowering two of Iran’s main clients: former Iraqi Prime Minister Nouri al-Maliki and Syria’s President Bashar al-Assad. The GCC has also pressured Iranian allies in Lebanon, convinced the Arab League to designate Hezbollah a terrorist group, cut aid to the Lebanese military, and expelled some Lebanese expatriates in Gulf countries.

Insofar as Iran is considered the main destabilizing force in the Middle East, the GCC is playing a crucial role in containing the threat. Others see the rivalry between the two camps as the greatest source of instability and therefore find faults, although not necessarily equal, on both sides.

TCB: What role have GCC member countries played in the ongoing conflict in Yemen?

MW: Reflecting a persistent division within the GCC, all member states, with the exception of Oman, quickly joined the Saudi-led coalition that entered Yemen’s civil war in March 2015. While Qatar, Kuwait, and Bahrain offered fighter jets in support of the campaign to restore the legitimate government of Yemeni President Abd-Rabbu Mansour Hadi, Saudi Arabia and the UAE also contributed armored units and ground forces. In 2016, after ousting Houthi rebel forces from the southern port city of Aden, UAE special forces turned their attention to Yemen’s al Qaeda affiliate, al Qaeda in the Arabian Peninsula, helping to drive its fighters from the city of Mukalla, which AQAP had seized and held for nearly a year. Oman, meanwhile, consistent with its preferred role as regional mediator, has been actively engaged in ongoing, UN-led efforts to find a negotiated settlement to the conflict.

TCB: What is the level of cooperation between GCC member countries on the economic front? What has the GCC done to offset the recent fall in global oil prices?

MW: There is not great policy coordination in trade or financial regulation among the GCC states. However, they are cooperating on the implementation of a value-added tax, scheduled for early 2018. GCC states often create redundancies in their competition to create financial centers and free zones to attract foreign investment. As for the current fiscal reality facing the GCC, there is less coordination but some political cover for austerity measures, including the reduction of subsidies on fuel, electricity, and water. Each country can point to similar austerity measures among neighbors to justify reforms to citizens.

Lavish state spending on infrastructure, public sector salaries and benefits, subsidized water and electricity is no longer feasible, though there is considerable variation among the GCC states in their fiscal health. Oman and Bahrain face the tightest budget constraints, while Saudi Arabia faces pressure to secure productive employment for its large population. Another important trend in Gulf financial governance is the popularity of national vision plans, which are widely publicized to document the state’s ability to reform the economy. To date, however, the main fiscal remedy to the decline in oil revenue has been debt issuance, bonds and loans, which is surging across the GCC.

TCB: How would you assess the current state of relations between the GCC and the U.S. government? What could be done to further improve relations?

MW: The GCC countries and the United States have experienced unusually strained relations since the U.S. decision to engage with Iran and the signing of the Joint Comprehensive Plan of Action nuclear agreement in July 2015. To reassure Gulf allies, former U.S. President Barack Obama invited the GCC leadership to a summit at Camp David in May 2015, which concluded with a strong reiteration of the U.S. commitment “to deter and confront external aggression against our allies and partners.” Although the GCC later endorsed the Iran nuclear deal, tensions remained throughout Obama’s presidency, though the April 2016 summit in Riyadh strengthened cooperation in counterterrorism and maritime security.

In contrast, most GCC countries have been heartened by the stated intent of the Trump Administration to ratchet up sanctions on Iran and the immediate show of force shown in repositioning the U.S. destroyer USS Cole off the coast of Yemen following a Houthi attack on a Saudi frigate. Improvements in U.S.-GCC relations can be achieved through the working groups on issues such as border security, terror financing, cybersecurity, and critical infrastructure protection that were established at the Camp David summits.

This article was originally published by The Cipher Brief.