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Gulf oil exporting states to launch single currency



The Arab states of the Gulf region have agreed to launch a single currency modelled on the euro, hoping to blaze a trail towards a pan-Arab monetary union swelling to the ancient borders of the Ummayad Caliphate.

“The Gulf monetary union pact has come into effect,” said Kuwait’s finance minister, Mustafa al-Shamali, speaking at a Gulf Co-operation Council (GCC) summit in Kuwait.

The move will give the hyper-rich club of oil exporters a petro-currency of their own, greatly increasing their influence in the global exchange and capital markets and potentially displacing the US dollar as the pricing currency for oil contracts. Between them they amount to regional superpower with a GDP of $1.2 trillion (£739bn), some 40pc of the world’s proven oil reserves, and financial clout equal to that of China.

Saudi Arabia, Kuwait, Bahrain, and Qatar are to launch the first phase next year, creating a Gulf Monetary Council that will evolve quickly into a full-fledged central bank.

The Emirates are staying out for now – irked that the bank will be located in Riyadh at the insistence of Saudi King Abdullah rather than in Abu Dhabi. They are expected join later, along with Oman.

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jumpjet's picture
Submitted by jumpjet on

From a rather astute poster over at DailyKos named Pluto, who keeps extensive track of currency.

The dollar's days as the global reserve currency are probably numbered, but I'm not really sure that's a bad thing.

Submitted by [Please enter a... (not verified) on

Well, maybe not for the rest of the world, but for the American people it will probably come as an unwelcome surprise.

jumpjet's picture
Submitted by jumpjet on

I generally think we should now pursue a weak dollar policy, to make imports more expensive and exports cheaper. It's one facet of a broader plan to rebuild U.S. manufacturing. However, the global reserve currency must have a certain strength to it, yes?

Submitted by [Please enter a... (not verified) on

Well, I mean, that would be good if we manufactured anything. I think ultimately it would just make things more expensive for us, and we wouldn't see the increase in jobs anytime soon.

I guess the world reserve currency has to have strength to it; hopefully the strength of a strong economy and not just of a strong military.

jumpjet's picture
Submitted by jumpjet on

And I can't believe anyone who says they're not coming back. That's bullshit. Of course they can come back. All it takes is the political will to serve the interests of workers over owners.

A weak dollar is only one part of the framework. You also have to put trade barriers in place- tariffs, quotas, capital controls, etc.

I can see that, for a while, forcing the purchase of domestically produced goods only might be expensive, especially for working class folks. I think you could ameliorate that with an appropriate increase in wages, though.

madamab's picture
Submitted by madamab on

Manufacturing wind turbines, solar panels, electric/fuel efficient cars, light rail for a new country-wide light rail system. We can also create jobs by prioritizing building up, modernizing and repairing our electrical grid.

Obama has even made some weak efforts in this direction, but I guess we the people need better lobbyists if we REALLY want to see some progress.

Submitted by [Please enter a... (not verified) on

Well, I mean, there's already significant overcapacity in solar. All these other things probably really wouldn't take that many people to make. That should be a good thing, but if you keep prices from coming down it's not.

Submitted by [Please enter a... (not verified) on

Well, I think some of these jobs are permanently lost. There have been entire factories built without people on the assembly line. To me, that's not necessarily a problem.

What I think should be happening is that prices should come down accordingly. That would make our standard of living go up because things are just less expensive. But there's some glitch in the system. It seems like there's a lack of competition in the system that's making things more expensive than they should be.

DCblogger's picture
Submitted by DCblogger on

the Euro is just the latest step of a process that was begun after WWII with the establishment of the European Common Market. Admittance to the common market was based on several factors, the most important of which was that the country had to be a democracy.

Obviously a pan Arab currency will never go anywhere.

My Arab friends refer to the GCC as the Gulf Capitulation Council.

Submitted by [Please enter a... (not verified) on

I'm not sure how them being democracies and us trading with them are connected. We obviously still trade with them even though they're not democracies. If they choose to create a common currency, I don't see what there is stopping them.