Lavish receptions and ceremonial displays marked President Trump's recent tour of the Gulf. Behind the diplomatic pageantry, however, a more significant development has been taking shape: the emergence of an Arab economic bloc with ambitions extending far beyond traditional resource-based cooperation. The Gulf Cooperation Council (GCC) has promised much and delivered modest results for four decades. Now something's changed. The club of six wealthy monarchies – Saudi Arabia, UAE, Qatar, Kuwait, Bahrain and Oman – is getting serious about economic integration, and remarkably, drawing former rivals into its orbit.

What's driving this shift? Economics, naturally. The World Bank projects GCC economies will grow by 4.2% in 2025-26, with non-oil sectors expanding reasonably. But there's something else afoot: a growing recognition that even resource-rich economies must diversify to ensure long-term prosperity.

Regional integration isn't merely sensible; it's increasingly essential for survival in a world where fossil fuels no longer guarantee perpetual wealth. Even the most robust sovereign wealth funds require diversification strategies to sustain growth.

Iraq and Syria offer the most striking examples of this new regional geometry and push for regional calm. Once isolated from its Gulf neighbours, Damascus and Baghdad are now being welcomed into regional economic and political forums.

Saudi Arabia and the UAE recently committed $6bn for development projects. Prime Minister Mohammed al-Sudani has strengthened ties with Riyadh, culminating in this weekend’s Arab League Summit in Baghdad.

The return of Donald Trump to the White House has accelerated these trends. During his regional visit this month, Trump received extraordinary investment pledges – $600bn from Saudi Arabia alone, while the UAE had earlier promised $1.4 trillion over ten years and Qatar just as much. These figures warrant healthy scepticism. But even if only partially realised, such commitments represent a meaningful shift in regional capital flows.

Trump's transactional diplomacy aligns neatly with Gulf leaders’ priorities. His administration is already revising the Biden-era restrictions on advanced semiconductor exports, potentially accelerating the UAE's artificial intelligence development. This isn't simply deference to American power. By offering substantial investments, Gulf states are purchasing influence over everything from regional security policy to technology access. Economic leverage translates into strategic influence, particularly with an administration that views international relations through a commercial lens.

The emerging bloc's influence stretches well beyond the Gulf's shores. Egypt, Jordan and Iraq have established their own trilateral cooperation mechanism, and have had four leadership summits since 2019. The region's traditional political heavyweights, now facing economic challenges, are seeking closer alignment with Gulf financial centres. For Egypt, once the undisputed cultural and political leader of the Arab world, this reorientation is particularly significant. Despite fiscal constraints, it still commands a population of 110mn – an attractive market for Gulf investors seeking growth opportunities beyond their saturated domestic markets.

More unexpected is the bloc's eastward engagement. Central Asian states are increasingly drawn into cooperation frameworks, with the next GCC-C5 Summit scheduled for Samarkand in 2025. This historic trading hub on the Silk Road offers symbolic resonance for a grouping that spans from the Mediterranean to the doorstep of China.

Perhaps the most remarkable development is the cautious rapprochement with Iran. The 2023 Saudi-Iranian reconciliation, brokered by China (with the United States notably absent), has created space for measured economic engagement. Iranian pilgrims have returned to Mecca, while Emirati businesses have resumed commercial dealings with Iranian counterparts. This pragmatism reflects practical necessities rather than ideological alignment. Saudi Crown Prince Mohammed bin Salman's (MbS) ambitious Vision 2030 diversification programme requires regional stability. Infrastructure projects, from electricity interconnection to water management schemes, benefit from transnational cooperation, but they are limited.

The practical mechanisms of this emerging bloc are less glamorous than diplomatic summits but equally important. The GCC Customs Union has operated since 2015, and members have implemented a 5% value-added tax, transformative for economies previously reliant almost exclusively on resource revenues. Plans for a single currency remain largely aspirational. Announced for 2010, the initiative has produced little beyond establishing a monetary council. Yet the foundation for deeper integration continues to develop, with standardised dispute resolution mechanisms and increasing regulatory harmonisation.

What makes this bloc particularly noteworthy is its strategic independence. Gulf states participate enthusiastically in China's Belt and Road Initiative while maintaining extensive defence cooperation with the United States. Major ports host commercial facilities serving both Western and Eastern partners. This balancing act reflects a multipolar international order where regional powers need not align exclusively with either Washington or Beijing. It's strategic pragmatism that maximises economic opportunity while preserving policy autonomy.

Economic diversification remains a work in progress. When energy prices decline – as they have recently – national budgets feel immediate pressure. The tension between Saudi Arabia's need for relatively high oil prices to fund its economic transformation and Trump's preference for lower fuel costs presents a fundamental challenge.

Nevertheless, the trajectory is clear. The Arab world, with Gulf states as its economic engine, is forging an increasingly integrated economic zone. It won't resemble the European Union, but it represents the most significant effort at regional economic coordination in generations.