GCC = Gulf Cooperation Council

[believing]

By Martin Dokoupil Sunday, 13 December 2009 7:57 PM

Gulf Arab oil exporters will move closer to a unified currency when their rulers meet on Monday in Kuwait, which promised to seek the return of the United Arab Emirates and Oman to the monetary union plan.

The UAE, the second largest Arab economy, dealt a serious blow to the union by pulling out in May in protest at the decision to locate any joint central bank in Saudi Arabia.

Gulf finance and foreign ministers meet later on Sunday to set the summit's agenda and Kuwait's finance chief has said bringing the UAE and Oman back was on its wish list for its forthcoming presidency of the Gulf Cooperation Council (GCC).

Speaking to KUNA on Friday, Mustapha al Shamali said: "This would strengthen the economies of the region and turn it into an economic bloc of (importance) that would be taken into consideration globally."

Kuwait is taking over the rotating presidency of the six-nation GCC, a loose economic and political bloc, for 2010.

The UAE's pullout, which came three years after Oman's, has shaken the politically fragile project as the world's third-largest oil exporter and key Middle East business hub accounts for a quarter of the region's gross domestic product.

Fellow GCC members, Saudi Arabia, Kuwait, Qatar and Bahrain stayed the course, but admitted the original 2010 unified currency deadline cannot be met.

The UAE was rather unlikely to announce a comeback at the closed-door summit in Kuwait on Dec 14 to 16, but it may reconsider the decision in the coming months, analysts say.

The summit convenes under the shadow of the debt crisis of Dubai - one of seven members of the UAE federation - which cost markets across the region since the emirate asked for a standstill on the debt of a state flagship firm on Nov 25.

James Reeve, senior economist at Samba Financial Group in London, said that the UAE "is unlikely to resume (union) negotiations from a position of weakness and for that reason they are likely to stay out of the single currency for a while yet."

A source close to the matter did not expect to see the UAE's decision reversed at the summit, and Kuwait said the location of the joint central bank would not be reviewed.

The UAE central bank governor said last month the country had fundamental reservations about the project, including that its monetary council lacked teeth.

The much smaller Sultanate of Oman opted out of the plan in 2006, saying it was not going to be ready for the 2010 deadline.

Analysts said Dubai's debt pile was unlikely to be much discussed at the summit, in spite of its regional impact.

Speaking in Riyadh, chief economist at Banque Saudi Fransi-Credit Agricole Group, John Stakianakis, said: "It would be interfering into internal affairs of the federation of the UAE and I do not think that is something they want to do."

Dubai's debt crisis was unlikely to find its way onto the agenda of the summit, Saudi Arabia's al Riyadh newspaper said, citing an senior Gulf official, who did not wish to be identified.

Kuwait's foreign minister, however, told al Hayat newspaper that the rulers are going to debate impacts of external economic shocks on their economies in view of Dubai's debt problems.

The Gulf rulers will use the meeting to decide the authority and shape of the joint monetary council and the willingness of the Saudis to offer concessions for key positions, which would be essential in any attempt to lure the UAE back in the future, analysts said.

Striking a power balance in the union remains a challenge, analysts say, as some smaller Gulf States resist the dominance of Saudi Arabia, the world's biggest oil exporter. A deal on the new currency regime remains distant in spite of the recent debate.

Giyas Gokkent, chief economist, National Bank of Abu Dhabi, said: "If there is sufficient political will and recognition that this is a common project and no single party dominates the project, things would be much smoother,

"But as it is, I do not think that is currently in place," he said.

(Reuters)

http://www.arabianbu...ency-10071.html

What else has been said about a "unified currency" ? Would that replace the Iraq dinar as the currency of Iraq?

Edited January 1, 2011 by believing

[tjmunson]

When dealing with the ego's involved with this unified gulf currency, this thing could drag on for years and years. I don't see this, in any way affecting our investments.

[believing]

I agree. After more study I see that Iraq is NOT a member of the GCC. It would not effect the Iraqi dinar, or it SHOULD not anyway.

The GCC States.

Not all of the countries neighboring the Persian Gulf are members of the council. Iran and Iraq are currently excluded although both nations have a coastline on the Persian Gulf. This is because the union is mostly regional, rather than based on geography. The associate membership of Iraq in certain GCC-related institutions was discontinued after the invasion of Kuwait.^[2] The GCC States have announced that they support the Document of The International Compact with Iraq that was adopted at Sharm El-Sheikh on 4–5 May 2007. It calls for regional economic integration with the neighboring states but there is no prospect of Iraqi accession to the GCC

Read more: http://www.answers.com/topic/cooperation-council-for-the-arab-states-of-the-gulf#ixzz19nDEInO5