(Reuters) – Saudi Arabia’s thrust for a Gulf Union, driven by fear of Arab Spring contagion and spreading Iranian influence, has stumbled on misgivings among smaller neighbors about a loss of sovereignty and increasing domination by Riyadh.

Gulf diplomats, officials and analysts expressed surprise that Saudi Arabia had opened itself up to such a public setback.

The union proposal, initially designed to contain Shi’ite Muslim dissent in Bahrain and counter the growing sway of Shi’ite Iran, surprised Gulf Arab leaders when King Abdullah first unveiled it at a summit in December. Rather than fade away, it acquired momentum when a Saudi minister outlined plans for shared foreign and defense policy last month.

Yet when the meetings ended on Monday, there was little hiding the fact that some leaders in the six-nation Gulf Cooperation Council (GCC) had put the brakes on the project, if not shot it down entirely.

“These things need to be looked at in depth,” said Ghanem al-Najjar, professor of political science at Kuwait University.

“You don’t just decide that you will have unity, by trying to create some sort of unified body against Iran and to handle the development created by the Arab uprisings,” he said, referring to street revolts that have toppled several dictators since early 2011 and have rattled GCC member Bahrain’s monarchy.

It will “take time” to get all Gulf countries on board, Saudi Foreign Minister Prince Saud al-Faisal told reporters after the GCC summit, explaining that Gulf leaders wanted to know “details and details of the details” of how Saudi Arabia imagined a “union” bringing them closer than they are now.

He even stated baldly that there was “no step to have a special relationship between Bahrain and Saudi Arabia” – despite fanfare to the contrary in pro-government Bahraini media – while admitting both leaderships would welcome a closer association.

“They had no idea really what they wanted the union to look like, then they came on Sunday to try to work things out and couldn’t agree. By Sunday night there were strong rumors it wasn’t going well,” said a Qatar-based analyst familiar with the talks. Saudi officials were angry and disappointed, he said.

People with access to the room where the leaders met noted few smiling faces, in contrast to most such events, and even sensed anger among some of them.

Revealingly, heads of state from Oman and the United Arab Emirates (UAE) did not attend the summit, which brought leaders from the other three member states – Qatar, Bahrain and Kuwait.

OMAN, UAE, KUWAIT OBJECTIONS

The Saudis envisage close economic, political and military coordination and a new decision-making body based in Riyadh, replacing the current Secretariat of the 31-year-old GCC.

Reports from officials, diplomats and media suggest that Oman, Kuwait and the UAE mounted the strongest objections to the union proposals, fearing being lorded over by the Saudis as well as difficulties in integrating varying social and political systems. A Saudi spokesman was not available to comment.

“The UAE will not accept a single country taking over a union, so that issue has to be clear,” a UAE official told Reuters, pointing to the UAE’s 2009 withdrawal from a monetary union over Saudi insistence that Riyadh host the central bank.

Asked if he thought the union would eventually happen, the official added: “Let’s just say it will take more time.”

Saudi Arabia is by far the biggest and most powerful state in the group of major, U.S.-aligned oil and gas producers.

Although the six states look similar on the surface – Arab, conservative Muslim and with similar social customs – there are wide differences of tribe, history, sect and geography among them, particularly in Bahrain with its Shi’ite majority, as well as in their degree of openness to Western culture.

Oman, which has long sought to protect its identity deriving in part from a distinctive Indian Ocean coast and maritime tradition, said as early as 2006 that it would not join the as-yet unrealized single currency project.

“The UAE may not be as keen on a stronger union because they may worry about Saudi Arabia being dominant within that,” a Western diplomat said.

MISSILE SHIELD DISPUTE

Dubai-based defense analyst Theodore Karasik said the UAE was also concerned that rushing into a Gulf Union could endanger progress already made in delicate defense negotiations.

The UAE and Saudi Arabia are arguing over where to locate the central command of a Gulf missile shield that the United States has pushed them on as the best means of defense against Iran, but they are reticent about sharing data.

“A GCC military technical committee has been working on a shared anti-ballistic missile plan for the last few years and now there’s a debate about where it should be based – the UAE or Saudi,” Karasik said.

Kuwaiti parliament speaker Ahmed al-Saadoun said equal levels of political openness in each country should precede a closer political compact. Saudi Arabia has no elected parliament, while Kuwait has the most lively political culture.

“Freedom of expression and the right of popular participation in decision-making…, we hope (that) will be achieved in all GCC states shortly so the union can be established,” Saadoun said on Twitter.

“Leaders of Kuwait, Qatar, UAE and Oman expressed concern about a loss of identity of individual states and pointed to differences in law between the countries,” the Kuwaiti daily al-Qabas commented. “A lot of GCC decisions have still not been implemented. It would be better to get these done first.”

Even the rise of Iran over the past decade and the Arab Spring uprisings have failed to put all GCC six on the same page, while lingering border disputes have often marred ties among states where personalized, dynastic rule is the norm.

While Saudi Arabia, Kuwait and the UAE want a strong policy to stem Iranian influence in the region, Qatar and Oman have hedged their bets by nurturing good relations with Tehran.

BAHRAINI ENTHUSIASM

The only country to wholeheartedly welcome the fast track to Gulf Union appears to have been Bahrain, where many see the proposal as a way of crushing an uprising led by majority Shi’ite Muslims who they believe have backing from Iran.

“I believe the union between Saudi Arabia and Bahrain will happen 100 percent, with maybe the others coming afterwards,” said Anwar Eshki, a Saudi analyst and ex-adviser to the cabinet.

Bahrain, whose economy relies on oil from a field shared with Saudi Arabia, allowed Riyadh to send in Saudi troops in an initial attempt to suppress the protests last year.

But the turmoil has revived, economic growth has been cut in half and a sense of crisis pervades an island state increasingly divided by sect where hardliners on both sides gain ground.

Iran has strongly objected to the Saudi move to formalize its influence over Bahrain, with parliamentarians saying it would deepen divisions on the island and speaker Ali Larijani even suggesting it should be Iran that Bahrain integrates with.

Nabeel al-Hamer, media adviser to Bahrain’s King Hamad, tried to reassure supporters afterwards, promising a Riyadh summit in coming months to sign a unity charter including Qatar.

Bahrain’s opposition movement dismissed the entire project as just the latest maneuver by aloof, entrenched rulers to put off the day when they cede powers to an elected government.

“This is an attempt to escape a political resolution by putting Bahrain under the hegemony of Saudi Arabia, which wants to show it is the big power in the region,” said political activist Abdulnabi Al-Ekri. “I think it will be a failure.”

(Reporting by Andrew Hammond, Sylvia Westall, Angus McDowall, Amena Bakr, Regan Doherty and Raissa Kasolowsky; Editing by Sami Aboudi and Mark Heinrich)