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Need to overcome many ‘ifs’ for GCC to have same coin ‘Gulf currency never existed’

Talks regarding a unified GCC currency has reduced to such an extent that it has almost vanished. The concerned comptroller has apparently realized the lack of seriousness for approving such a system. It was merely a wish that the GCC ministers of Finance conveyed from one meeting to another. The truth is that Gulf currency never existed besides in the minutes of Gulf summits and meetings of ministers of Finance. No serious moves were taken in the past several years for approving the currency.

Approving a unified currency for a number of countries is not easy particularly for GCC countries which have economies of different levels. They do not have similar financial portfolios or credit classifications.
For example, Saudi Arabia’s economy cannot be compared with that of Bahrain, and the economy of United Arab Emirates cannot be compared with that of Oman. In addition, the credit classifications of Kuwait and Qatar are very high.

Therefore, tremendous efforts will be required to achieve balance in the financial, cash and credit systems of the GCC countries such as by investing heavily in Bahrain and Oman in order for these countries to have the same credit and monetary levels as their GCC counterparts.  If we consider the level of luxury in each of the GCC countries, we will realize that the currency cannot be unified. It is necessary to increase the monetary efflux in Bahrain and Oman as well as the per capita income in all GCC countries by implementing programs to deal with unemployment and increasing investments for development.

There are also some other hindrances in approving the unified Gulf currency such as deciding on the country where the headquarters of the Gulf Central Bank will be located. United Arab Emirates perceives that it deserves the honor of hosting the Gulf Central Bank especially since it had asked first about it in 2004. However, Kingdom of Saudi Arabia was selected when the issue was voted on. It seems the issue of the location of headquarters particularly with the competition between Riyadh and Abu Dhabi was the key reason behind the weak enthusiasm for approving the currency.

Meanwhile, Oman’s stance regarding the unified currency system lacks the seriousness that is essential for approving such a big decision. Do not be deceived by the statement issued by one of the officials who said Oman’s decision will not have an impact. On the contrary, its decision will influence the credibility in approving such a currency system. Some supported the stance of Oman to reject the unified GCC currency, which is similar to the stance taken by Britain when it refused to implement the Euro currency system and chose to retain its sterling pound currency. However, Oman is not like Britain and the economies of GCC countries are not similar to that of the European Union countries.

If GCC countries want a unified currency system, they have to adopt the principle of openness and transparency among each other and settle all conflicts that impede the establishment of Gulf Cooperation Council. They will have to start by forming a unified bourse and maintaining it in a manner that will protect the interests of the investors and the countries, and launch joint developmental projects in the fields of oil and gas, infrastructure, agriculture and other aspects. If they succeed in doing this, implementing a unified currency system will become a necessity rather than just being part of a statement, which is totally void of credibility, issued by a minister of Finance who is merely interested in getting the attention of the lens of photographers. Implementing a unified Gulf currency system requires hard and sincere work as well as huge financial resources, excellent credits and a sturdy central bank with reliable reserves.

By Yousef Awadh

By: Yousef Awadh

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