Monetary Union: Options Still Open
Haseeb Haider and Bruce Stanley
22 May 2009
ABU DHABI — The government on Thursday left the door ajar to the possibility that it could be persuaded to rejoin the planned regional monetary union, a day after announcing that it would abandon the project.
Senior ministers pinpointed the reason for the UAE’s withdrawal as the government’s unhappiness about the Gulf Co-operation Council’s decision to base its future central bank in Saudi Arabia.
Foreign Minister Shaikh Abdullah bin Zayed Al Nahyan said that the UAE had pulled out of the project for a single regional currency because Gulf Arab heads of state had decided against basing the joint central bank in this country. At the same time, however, he signalled a willingness of the UAE to reconsider its position.
“I do not say that the door has been firmly closed. In politics, nothing is over,” the official Wam news agency quoted him as telling reporters during an official visit to Riga, Latvia. “Nevertheless, I say we are not interested for the time being.”
The UAE was the first of the six GCC member states to ask to play host to the central bank, in 2004, and the government considered its role as the bank’s headquarters to be “part of the arrangements for entry into the Council’s monetary union,” according to a Wam report. Wam noted that the UAE currently is not the headquarters for any organisation affiliated with the GCC.
Minister of Economy Sultan bin Saeed Al Mansouri, speaking in the capital, said that if Saudi Arabia were to decline its selection and let the UAE be home to the central bank, this would build a strong case for the UAE to rejoin the single currency project.
“We wanted to locate the GCC central bank in Abu Dhabi because the nation has a most suitable financial infrastructure required for such an organisation,’’ Al Mansouri told reporters after a meeting of the UAE-Algeria Joint Economic Ministerial Commission.
The UAE had long supported the group’s efforts to form a monetary union, and its voice grew after Oman pulled out of the scheme in 2006 and Kuwait stopped pegging its currency to the dollar in 2007. The UAE has the second-largest economy in the GCC after Saudi Arabia. Its economy is also the most diversified, with large banking, construction and tourism industries and a comparatively small share of its wealth coming from exports of oil and gas. The UAE’s withdrawal dealt a severe blow to an already shaky project.
Qatar, meanwhile, reaffirmed its support on Thursday.
“We don’t believe in failure. We believe in the monetary union of the GCC countries, and we will continue to work on that,” Qatar’s Al Arab daily quoted Ibrahim Al Ibrahim, an economic advisor to the Qatari Amir, as saying.
Al Ibrahim called the UAE’s withdrawal regrettable. “There are things that are going positively and others that are going negatively.”
His comments amplified those that Kuwaiti Finance Minister Mustapha Al-Shamali made on Wednesday.
Gulf leaders chose on May 5 to put the central bank’s headquarters in the Saudi capital Riyadh, which is already home to the GCC Secretariat.
“We believe that the UAE was the best choice for the headquarters,” the UAE Foreign Minister said in Riga. “It is not about selecting Saudi Arabia, it is about not selecting the UAE.”
The UAE is a financial centre and has the region’s most-transparent economy, making it well suited for the headquarters, he said.
“We thought that the decision made by the GCC was not based on merit, it was based on different issues altogether.” — With inputs from Wam, Reuters
22 May 2009
ABU DHABI — The government on Thursday left the door ajar to the possibility that it could be persuaded to rejoin the planned regional monetary union, a day after announcing that it would abandon the project.
Senior ministers pinpointed the reason for the UAE’s withdrawal as the government’s unhappiness about the Gulf Co-operation Council’s decision to base its future central bank in Saudi Arabia.
Foreign Minister Shaikh Abdullah bin Zayed Al Nahyan said that the UAE had pulled out of the project for a single regional currency because Gulf Arab heads of state had decided against basing the joint central bank in this country. At the same time, however, he signalled a willingness of the UAE to reconsider its position.
“I do not say that the door has been firmly closed. In politics, nothing is over,” the official Wam news agency quoted him as telling reporters during an official visit to Riga, Latvia. “Nevertheless, I say we are not interested for the time being.”
The UAE was the first of the six GCC member states to ask to play host to the central bank, in 2004, and the government considered its role as the bank’s headquarters to be “part of the arrangements for entry into the Council’s monetary union,” according to a Wam report. Wam noted that the UAE currently is not the headquarters for any organisation affiliated with the GCC.
Minister of Economy Sultan bin Saeed Al Mansouri, speaking in the capital, said that if Saudi Arabia were to decline its selection and let the UAE be home to the central bank, this would build a strong case for the UAE to rejoin the single currency project.
“We wanted to locate the GCC central bank in Abu Dhabi because the nation has a most suitable financial infrastructure required for such an organisation,’’ Al Mansouri told reporters after a meeting of the UAE-Algeria Joint Economic Ministerial Commission.
The UAE had long supported the group’s efforts to form a monetary union, and its voice grew after Oman pulled out of the scheme in 2006 and Kuwait stopped pegging its currency to the dollar in 2007. The UAE has the second-largest economy in the GCC after Saudi Arabia. Its economy is also the most diversified, with large banking, construction and tourism industries and a comparatively small share of its wealth coming from exports of oil and gas. The UAE’s withdrawal dealt a severe blow to an already shaky project.
Qatar, meanwhile, reaffirmed its support on Thursday.
“We don’t believe in failure. We believe in the monetary union of the GCC countries, and we will continue to work on that,” Qatar’s Al Arab daily quoted Ibrahim Al Ibrahim, an economic advisor to the Qatari Amir, as saying.
Al Ibrahim called the UAE’s withdrawal regrettable. “There are things that are going positively and others that are going negatively.”
His comments amplified those that Kuwaiti Finance Minister Mustapha Al-Shamali made on Wednesday.
Gulf leaders chose on May 5 to put the central bank’s headquarters in the Saudi capital Riyadh, which is already home to the GCC Secretariat.
“We believe that the UAE was the best choice for the headquarters,” the UAE Foreign Minister said in Riga. “It is not about selecting Saudi Arabia, it is about not selecting the UAE.”
The UAE is a financial centre and has the region’s most-transparent economy, making it well suited for the headquarters, he said.
“We thought that the decision made by the GCC was not based on merit, it was based on different issues altogether.” — With inputs from Wam, Reuters
quoted from: Khaleej Times
