On Gulf GCC Monetary Dis-Union. Why Riyadh Was the Wrong Choice: Look at Sardinia
“Governor of the Saudi Arabian Monetary Agency (central bank), Mohammed al-Jasser, said that the withdrawal of the United Arab Emirates will not hamper or delay plans for the GCC Gulf monetary union. He said that there are four states still committed to the currency union. UAE and Oman both withdrew recently….” alarabiyaMaybe, but the main push for a Gulf monetary union has been political rather than economic: that is why it was so easy for the Omanis and the UAE to pull out. There is little inter-regional trade, and there is competition to attract investment from, and away from, each other. There is no economic cost to withdrawal because there is no immediate economic benefit to staying in. This is not the old ECSC or Common Market, or EEU, or EU. The Gulf economies produce the same thing, and they import the same things from the ROW: almost everything other than oil and potentates.
What is certain is that the remaining three smaller states may not wish to be so tightly embraced within the Saudi hug. That is especially true if Qatar decides to withdraw at some point, although there are no indications yet of any such move, and it may not do so.
What is also certain is that Qatar will be the next member state to watch. The Qataris do not like playing second fiddle within the GCC or within the wider the Arab region. This recalcitrance has drawn a sharp and vocal media assault on them from within the GCC and from the Egyptian government newspapers.
Oddly, there is little public discussion in these countries on this issue. The media in the states that remain committed to the unified currency plan have not opined on the subject: with the Saudi exception. It is as if they are not enthusiastic enough about it to defend it in public. The Saudi are clearly enthusiastic: the currency council and the central bank, if it is established, will be located in Riyadh, the GCC capital least qualified to be a headquarters of a regional central bank. The UAE and Bahrain borh have much more vibrant financial sectors, and they give easy access to business travelers to enter. It is sort of like putting the European Central Bank in, say, Sardinia (or Corsica). Except these two places are more open than Riyadh. (Ok, Sardinia had a major role in Italian re-unification). So, the name of the currency, if it is issued, will be either the Dinarius (from the old Roman currency) or the Riyal (from the Spanish Real=Royal, a good Catholic name, but it is ‘royal’).
Cheers
mhg
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