GCC Gulfie Currency: New Second Thoughts, another Chance to bloc Hegemony………….
“Four Gulf states that signed monetary union pact studying 'what went wrong' in eurozone crisis. - Central banks in the four Gulf states that signed a monetary union pact are studying the impact of the eurozone crisis on their own common currency plans, Kuwait's foreign minister said on Tuesday. "This is a highly technical issue and is being handled by the central banks of the member states," Sheikh Mohammed al-Sabah, whose country is the rotating president of the six-member Gulf Cooperation Council (GCC), told reporters. Bahrain, Kuwait, Qatar and Saudi Arabia signed the monetary pact while the United Arab Emirates, the second-biggest GCC economy, and Oman pulled out. Sheikh Mohammed said on Sunday that the four GCC states had paused on monetary union to draw lessons from the debt crisis in Europe and its impact on the euro. "A pause is not a stop," Sheikh Mohammed said on Tuesday. "A pause is a reflection ... to see what went wrong."…….. The Kuwaiti minister insisted the energy-rich GCC states would go ahead with monetary union and a common currency."We are going ahead with the common currency. We just want to make sure that the lessons of the Greek drama does not escape us ... When we hit the start button again, we might be faster, more assured and confident."…….…”
No, in this case, a pause is a very long stop, at least. The central banks and monetary authorities did not plan well for the common currency. In fact the planning was bad, as if nobody was serious about the timetable set. Maybe they were not allowed to plan well by higher ups. I noted several years ago that it WON’T happen by 2010, and I noted later that it WON’T happen by 2015. But bad planning was not the only reason for failure. Maybe some of them did not even want a completion of the project: I suspect that most of the remaining four are not serious about it. I strongly suspect that only Saudi Arabia is eager for it (and perhaps Bahrain, perhaps). Lucky for the rest, the Saudis probably do not know how to go about planning it alone.
This is an old 'project' that precedes the GCC: Saudi Arabia was not even part of it initially. I had in the past emphasized trade and budgetary issues as impediments, even advising them here to go and read about the German Zollverein. Now I can see political and other serious pitfalls. The main worry now, the gorilla in the room for the smaller three remaining states, is the issue of loss of sovereignty, which will loom seriously if and when there is a common currency. In the European case there is no single potentially dominating country: Germany, France, Italy and a couple of others are all big independent players in Europe. The Saudi heavy-handed push for Riyadh as monetary capital (wrong choice) and for their governor as chairman of the new committee has not helped. The other members are too shy to openly talk about that gorilla, but they have it in their mind. The "Gulfie" currency, if it happens, a big if, it will not occur before 2020 (as per my last prediction).
Cheers
mhg
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