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IntroductionChristian KochThe relationship between the Gulf Cooperation Council states (Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates) and the now enlarged 25 member European Union is characterized by a strange dichotomy. On the one hand, the ties are strong and growing, specifically in terms of the trade relationship. Following the conclusion of the 1988 GCC-EU Cooperation Agreement, the EU has emerged as the largest commercial partner of the GCC with exports amounting to $27.9 billion and imports of $21.4 for 2002. The two-way trade accounted for almost 17% of the total GCC commercial exchange. This strength has also been somewhat translated into the political sphere, explained in part by the fact that EU member states have become increasingly aware of the overall direct strategic importance that the Gulf holds for Europe. In turn, attempts have been made in recent years to broaden the dialogue to include the wider strategic perspective. Issues of geographical proximity certainly play a role in this regard.On the other hand however, the relationship has not developed as expected and there have been more obstacles and setbacks than overall advances. Geographical proximity has not brought about a free trade agreement (much sought after) where negotiations have been dragging on for over a decade without each side displaying the necessary will to bring such an agreement to fruition. All this despite the fact that the growing economic partnership would make such an agreement a natural expansion of the existing ties.On the political level, the two sides appear to be talking different languages. They each used the same phrases and words, i.e. political reform, strategic partnership, dialogue between the Gulf and Europe but apparently have completely different perceptions of what each of these terms means in reality or how to translate them into practice. The European Initiative on Democracy and Human Rights is a prime example where the good intentions underlying a principled policy are being undermined by mutual suspicions and failure to trulyGulf Research CenterKnowledge for AllPage 7