UAE, Oman urged to return to GCC monetary union

A landmark plan to launch the Middle East’s first currency union in the oil-rich Gulf is about to materialise but it would not be complete without the return of the UAE and Oman, a senior Gulf official was reported Wednesday as saying.

A decision by the heads of state of the six-nation Gulf Cooperation Council (GCC) at their summit in Abu Dhabi early this month to push ahead with the customs union removes a major obstacle to the monetary union, said Abdul Rahman Al Ateyya, GCC secretary general.

In comments published by the Saudi Arabic language daily Aleqtisadiah, Ateyya said a single currency has become closer than ever with the launching of the GCC Monetary Council, which will pave the way for the GCC Central Bank.

“The launching of a single currency is now closer than ever after obstacles blocking this project have been removed, mainly those obstructing the implementation of the customs union,” said Ateyya, a Qatari.

“The establishment of a GCC Central Bank will facilitate plans to set the period for launching a single currency…but the more important thing is the return of the GCC members which have not signed the agreement to the monetary union establishments…I mean specifically the Monetary Council and the Central Bank so we will be able to launch the common currency which caps all efforts to achieve full integration among the GCC economies.”

Ateyya described a single currency as the “peak of integration not only in the monetary field but on pan-GCC cooperation.”

He said merger plans among nations usually face obstacles but stressed those within the GCC need to be tackled through “sacrifices and concessions.”

The UAE quit the GCC monetary union early last year to protest a decision to choose Riyadh as the headquarters of the planned Central Bank on the grounds it was the first member to offer to host the institution and that it has no major GCC establishment. Oman pulled out earlier, saying it was not ready for the project, the world’s second major currency union after the European Union.

Saudi Arabia, Kuwait, Qatar and Bahrain, the other members of the GCC, decided to push ahead with the project by setting up a monetary council in early 2010. The four members say they will pursue plans to create a central bank.

Officials and analysts have described the UAE decision as a blow to the GCC monetary union since it is the second largest economy in the 29-year-old economic, political and defence alliance.

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