GCC Summit, Redrawing Gulf Currency Plan, Iranian Cat Among Pigeons?
The GCC summit of the Arab states of the Gulf will open this Monday in Doha, Qatar. For the first time Iran's President Mahmoud Ahmadinejad has been invited to attend, and he will. He will sorely miss the support of his buddy Hugo Chavez, but inviting him to a Gulf summit would be stretching it a bit.
This will be partly an economic summit, and coordination will be on the agenda. It looks like the GCC leaders have finally realized that they need to do some serious work on the trade issues before further economic and monetary integration can proceed, if they still wish for this to happen.
The failure of the planned currency union, originally scheduled for 2010 but now scarpped, has clearly brought home the folly of allowing the central banks to proceed without the basic trade and economic groundwork. My guess is that the budgetary issues have not been seriously dealt with either by the central banks, and these will pose the next major challenge to any monetary coordination or union, assuming that trade issues are ironed out. The continued weakness of the dollar and the instability of crude petroleum prices pose new challenges to currency coordination: they make it harder to tackle inflation and to deal with public expenditure in a uniform way. High oil prices have always been accompanied with speedy abandonment of any pretenses at reform in the Gulf states: this rule applies to both economic and political reforms. This time someone is getting more clever (cleverer?): now the pretenses at reform are continuing, but they are "Potemkin' reforms- in the end...no cigar.
So, it looks like some more years before the GCC Gulf Dinarius (a good Latin name for an ancient Roman coin), or Gulf Riyal (the very Catholic Spanish Real=royal, which is quite appropriate here).
The invitation to Ahmedainejad's is apparently not met with unanimous approval in the Gulf, certainly not in the United States either. Perhaps some GCC leaders, especially the hosting Qataris, thought of pulling an Obama here: what is good for a credible US presidential candidate is good for them (and who cares about the two very lame ducks in Washington whose poll ratings are below the age of consent?). A former GCC Secretary General, A. Bishara, has expressed his dismay at the step, and he is close to some high sources in both his native Kuwait and Saudi Arabia. The 'President' of the UAE, Shaikh Khalifa of Abu Dhabi today reiterated the UAE claim to three small islands in the Gulf that have been under Iranian control since before the Iranian Revolution brought the theocrats to power.
Cheers
Mohammed
m.h.ghuloum@gmail.com
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