09/06/2009
RIYADH, June 8 (Reuters) - The four Gulf Arab states heading towards a monetary union could review in the future an initial plan to link their joint currency to the U.S. dollar, the Gulf Cooperation Council (GCC) secretary-general said on Monday.
Saudi Arabia, Kuwait, Qatar, and Bahrain signed a pact to create a pared-down union on Sunday, weeks after the United Arab Emirates became the second country to opt out following Oman.
State-run Saudi Press Agency, citing Secretary-General Abdul-Rahman al-Attiyah, said on Sunday the joint currency would be pegged to the dollar.
When asked about the report, Attiyah said Gulf states had years ago decided to link their currency to the dollar but did not rule out a change in the future.
"I don't know if that will continue in the future but for now the fix is the dollar," he told reporters in the Saudi capital Riyadh where the agreement was signed.
Kuwait dropped the dollar linkage in 2007, but the remaining five members of the GCC -- a loose political and economic alliance -- still peg their currencies to the greenback.
The signing on Sunday came as a confidence-boosting move after the shock decision by the UAE to abandon the union in protest after a decision to base the joint central bank in Saudi Arabia.
Some analysts had questioned whether the withdrawal of the UAE, the Arab world's largest economy after Saudi Arabia, could derail the long-troubled project, launched in 2001.
The UAE said in May it would consider rejoining the union if the terms change and its neighbours agree to allow a joint central bank to be based in the country.
Saudi Arabia said earlier in June the location of the Gulf central bank would not be open for renegotiation.
Oman opted out in 2006 and earlier in 2009 the GCC abandoned an initial 2010 target for issuing common notes and coins.
Attiyah declined to give a new deadline.
