How the Saudis Killed the GCC Gulf Monetary Union, and Why is that Good…………
“DUBAI - The United Arab Emirates would hold off for now on a common Gulf currency...."We will not change anything for the time being until we see something solid and profitable," Sheikh Mohammad, who is also Dubai ruler, said in an interview broadcast on CNN. "We thought of the Gulf currency and we said -- the UAE said -- 'not yet,' and I think they are right," he said. The UAE and Oman have pulled out of a monetary union initiative for the Gulf Cooperation Council region, which also includes Bahrain, Kuwait, Qatar and Saudi Arabia. A single union pact had been signed in May 2009 to lay the ground for the monetary union. Sheikh Mohammad also defended pegging the UAE dirham to the US dollar saying, "We still believe in the dollar." The dirham-dollar peg had been the subject of much speculation when the greenback lost value against the euro before the current crisis in the eurozone……”
The UAE is out of the Gulf currency plan for good. There is no reason for them to join it: economic or political. There may be every reason, economic and certainly political not to join it. Oman has always been out for good, it was just going through the motions: like the proverbial but unreal English bride, it was “close your eyes and do it for England” type of thing. No more.
The other states are having second thoughts. There will be no currency union now with only four states. Only the Bahraini oligarchy, saddled with a Shi’a majority it distrusts and actively discriminates against, may be willing to go ahead now and play the complete sidekick. The rest have seen the writing on the wall of their national sovereignty, and they don’t like it. The Saudis overplayed their hands when they forced the choice of Riyadh for seat of a future central bank, and they overplayed again when they forced the choice of their SAMA governor to head the monetary council. They gave two clear warnings of the dangers of their intended hegemony plans. The fact that their media have been talking recently of “political merger” of the smaller states into Saudi Arabia has surely terrified the citizens of the other states. None of them want to be ruled by the al-Saud family, anymore than they wanted to be ruled by Saddam Hussein after 1990. Western military bases expanding all over the place: the French are opening a base in the UAE, the US is doubling the size of its naval base in Bahrain, US Central Command headquartered in Qatar, etc. Any fear of Iran is more political than military, an important Saudi potential trump card that is useless now.
The currency union plan itself is effectively dead, and the Saudis have unintentionally helped kill it. I was having strong doubts about the plan for several years now, but mainly for technical reasons.
Cheers
mhg
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