Gulf oil countries work towards a single currency
Political and economic alliance, similar to Europe, requires big concessions related to national sovereignty
by Pinedale Online!
May 26, 2011
Gulf News.com, the online version of Gulf News, a daily newspaper printed in Dubai, United Arab Emirates, posted an interesting opinion piece about the Gulf Cooperation Council (GCC) and its efforts to work towards the creation of a single monetary system and currency between their countries, similar to what Europe has done with the euro. The article was posted on May 27, 2011. It is entitled "A case for a single currency," and was written by Mohammad Al Asoomi, as a Special to their Weekend Review. In it, the author says the countries of the Gulf Cooperation Council (GCC) are seeking to issue their single currency, following in the footsteps of the European Union, which had issued earlier its euro single currency.
According to Wikipedia: The euro is the official currency of the eurozone: 17 of the 27 member states of the European Union (EU). It is also the currency used by the EU institutions. The eurozone consists of Austria, Belgium, Cyprus, Estonia, Finland, France, Germany, Greece, Ireland, Italy, Luxembourg, Malta, the Netherlands, Portugal, Slovakia, Slovenia and Spain. The currency is also used in a further five European countries (Montenegro, Andorra, Monaco, San Marino and the Vatican) and the disputed territory of Kosovo. It is consequently used daily by some 327 million Europeann Additionally, over 175 million people worldwide use currencies which are pegged to the euro, including more than 150 million people in Africa.
The Gulf Cooperation Council, or the GCC, is a political and economic alliance made up of six Gulf states - Saudi Arabia, Kuwait, the United Arab Emirates, Oman, Qatar and Bahrain. It aims to boost economic cooperation between members and, through collective security, to guard against any threat. The GCC was formed in May 1981, says the article, against the backdrop of the Islamic revolution in Iran and the Iraq-Iran war. Its members share similar political systems and a common social and cultural outlook. Collectively, the GCC countries possess almost half the world's oil reserves.
The opinion piece says, "the requirements to set up a single currency are complicated and difficult to adhere to because they are bound to financial and monetary policies, general debt and annual budget deficits, exchange rates, inflation, labour, interest rates and the payment system, all of which are complicated issues that need a flexible econ-omic system and a complete adherence to the financial and monetary policies issued by single currency establishments."
The article says that one of the issues that needs to be worked out is the loss of national sovereignty for the participating nations, and yielding of national authority to a broader governing commission. "Willem H. Buiter, professor of European Political Economy at the London School of Economics, also pointed this out in the Currency Union and Exchange Rate Issues: Lessons for the Gulf States, which means that GCC countries have to make bigger concessions related to national sovereignty, such as finding a Gulf Commission — similar to the European Commission — with vast authorities."
Click on this link for the full article: A case for single currency Gulf News.com