The door to Gulf monetary union not entirely shut


The UAE pulled out of the Gulf Co-operation Council’s long-sought monetary union because it was disappointed in the group’s decision to locate the group’s planned central bank in Saudi Arabia instead of here, the ministers said.

“We believe that the UAE was the best choice for the headquarters. It is not about selecting Saudi Arabia, it is about not selecting the UAE,” Foreign Minister Shaikh Abdullah bin Zayed Al Nahyan said during a visit to Latvia.

However, he left open the possibility that the government might, under the right conditions, reconsider its withdrawal.

“I do not say that the door has been firmly closed. In politics, nothing is over. Nevertheless, I say we are not interested for the time being.”

Minister of Economy Sultan bin Saeed Al Mansouri said separately that if Saudi Arabia were to decline its selection and let the UAE become the central bank’s headquarters, this would create a good case for the UAE to rejoin the planned single currency.

“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 said.

The UAE was the first of the GCC members to request the right to serve as the central bank’s headquarters, in 2004. The country had long supported the idea of a regional monetary union, and its role grew after Oman withdrew from the plan three years ago.

The UAE has the second-largest economy in the GCC after Saudi Arabia, and its withdrawal was a hammer blow to the project’s chances for success.

Meanwhile, Reuters reported unnamed delegates of Opec as saying that the differences between the UAE and Saudi Arabia over Gulf monetary union would have no impact on the coordination of its production policy for crude.

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