GCC Monetary Union: Leaders Ratchet Up Toward Elusive Goal, At Snail’s Pace
“GCC leaders took tentative but incomplete steps toward monetary union. Riyadh was chosen to be the site of the future Gulf Central Bank, although five other countries would have liked to host it. This move effectively makes Riyadh the economic capital of the GCC……”Middle East Online and other Arab media.The Gulf Cooperation Council leaders held a consultative meeting in Riyadh at the Saudi king’s invitation. Oddly, several leaders did not attend, including the monarchs of Oman, Bahrain, and the United Arab Emirates. Even odder, Sultan Qaboos of Oman chairs the GCC council for this session, yet he did not attend. Monetary issues were part of a broad spectrum of subjects discussed.
Saudi media had signaled the Riyadh selection ahead of time, which may explain why leaders of UAE and Bahrain stayed away: they were the top competitors to host the bank. I personally would have chosen either one of those two, preferably the UAE for two main reasons: the quality of life is much better in either of these than in Riyadh. I think Riyadh has some quality of life, somewhere, but I did not see it on my visits. Maybe it is hidden behind high mansion walls.
And there are no beaches in Riyadh, nor in all of Najd (Central Arabia). The quality of life is very important in order to attract good talent, wherever they will hail from- unless they hail from Afghanistan. Actually the leaders picked Riyadh as home of a Gulf Monetary Board, whose task it will be to propose modalities (my word) for a joint central bank.
It looks certain that a unified currency will not see the light by 2010- hint: it takes a long time to design, order, and print such a huge amount of notes and coins. Before that there has to be agreement on other technical and policy issues. And what about the Central Bank and its laws which must not contradict any individual member's laws? It will take a bit longer, but when it does, some countries like Oman may not be part of it initially.
There has also been no hint as to the name of the new unified currency.
Naturally each country wants the name of its current currency to be adopted. The Saudis, Qataris, and Omanis will opt for a Rial or Riyal. The Kuwaitis and Bahrainis will opt for a Dinar. The lone UAE will prefer the Dirham. They all think these names are rooted in Arab history, which they are. They also think these are Arab names of ancient Arab currencies, which they are not. Here are a few hints as to where these names came from:
Ancient Rome: Dinarius was the currency of the Roman Res Publica since before Christ, since before Caesar.
Spain: Riyal or Rial comes from Real, the Spanish word for royal. Think Catholic Spain and Fernando and Ysabel- and don't forget Granada.
Greece: the Dirham is suspiciously close to the Greek Draxma, don't ya think?
Still, when it actually occurs it will be a historic landmark for the Middle East. This issue of Gulf currency union has been discussed since 1975, long before there was a GCC (trust me on that, I know). It probably is about time, but it will not happen in a year or two. My humble but very educated guess is that it will not happen before 2012, at the earliest. Trust me on that one too: I know!
Cheers
mhg
m.h.ghuloum@gmail.com
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