Three GCC Members Recall Ambassadors From Qatar, Threat to Petrodollar

Three GCC Members Recall Ambassadors From Qatar, Threat to Petrodollar

Half of the members of the Gulf Cooperation Council (GCC) — Saudi Arabia, the United Arab Emirates and Bahrain — recalled their ambassadors Wednesday from Qatar in response to Doha’s support for the Islamist Muslim Brotherhood and to a lesser extent displeasure with Qatar’s Al Jezeera television network.

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Influential GCC supports UZS goals in region

The GCC is a group of six of the richest and most influential Islamic nations in the Middle East.  The group has typically been supportive of US goals in the region and the GCC is notable for their their behind closed door agreement to mandate that the US dollar is used in all trade for oil, known as the “petrodollar trade,” which is key to the US remaining the dominant world reserve currency of choice.  ValueWalk had previously noted the group could be on the verge of a breakup over the Muslim Brotherhood issue and discussed the importance of the group relative to the petrodollar trade.

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Final straw failure to live up to November agreement

The final straw for the GCC appears to have been Qatar’s massive their continued support of the Muslim Brotherhood and other Islamic radical groups that are threatening the stability in Egypt and throughout the Middle East.  Saudi Arabia and the UAE, currently involved in crackdowns on Islamist groups inside their borders, had been close allies with former Egyptian President Hosni Mubarak, who was ousted in the Arab Spring protests in early 2011.

In a joint statement on state-run television, the GCC members cited a security agreement signed in late November by Qatar’s ruler Emir Sheik Tamim bin Hamad Al Thani.  The statement said Qutar’s support of the Muslim Brotherhood failed to uphold the security agreement, details of which were just made public Wednesday.  The agreement said all GCC members were not to interfere, “whether directly or indirectly” in another member nation’s internal affairs.  In language being interpreted as targeting Qatar’s support for the Muslim Brotherhood and Qatar’s funding of the Doha-based Al-Jazeera network, the agreement stipulated GCC countries would not support organizations or individuals that threaten the security and stability of Arabian Peninsula countries “either through direct security work or by attempting to influence politics.”

Reports noted that three months after signing the agreement, Qatar failed to take action despite “great efforts” by the Gulf Arab nations to reach out to Doha’s leadership to fulfill its side of the deal, said the Saudi-UAE-Bahrain statement.

GCC formed in 1981, all US allies

The Gulf Cooperation Council (GCC) was formed in 1981 on the auspices to create economic, scientific and business cooperation among its oil-exporting members. These Middle East members share the common faith of Islam, an Arabian culture, and an economic interest separate from OPEC. On a per capita basis, they are among the richest countries in the world. The Gulf Cooperation Council headquarters is in Riyadh, the capital of Saudi Arabia, its largest member. Together, they supply one third of U.S. oil and own up to $225 billion of U.S. debt, a key component of the petrodollar trade. These countries are seeking to diversify their rapidly growing economies away from oil.

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Mark Melin is an alternative investment practitioner whose specialty is recognizing a trading program’s strategy and mapping it to a market environment and performance driver. He provides analysis of managed futures investment performance and commentary regarding related managed futures market environment. A portfolio and industry consultant, he was an adjunct instructor in managed futures at Northwestern University / Chicago and has written or edited three books, including High Performance Managed Futures (Wiley 2010) and The Chicago Board of Trade’s Handbook of Futures and Options (McGraw-Hill 2008). Mark was director of the managed futures division at Alaron Trading until they were acquired by Peregrine Financial Group in 2009, where he was a registered associated person (National Futures Association NFA ID#: 0348336). Mark has also worked as a Commodity Trading Advisor himself, trading a short volatility options portfolio across the yield curve, and was an independent consultant to various broker dealers and futures exchanges, including OneChicago, the single stock futures exchange, and the Chicago Board of Trade. He is also Editor, Opalesque Futures Intelligence and Editor, Opalesque Futures Strategies. - Contact: Mmelin(at)
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