16/12/2009
KUWAIT, Dec 15, 2009
Gulf Arab countries endorsed a monetary union agreement on Tuesday despite the absence of major player the United Arab Emirates and fellow oil producer Oman and left options open for pegging their future single currency.
Rulers from the world's top oil exporting region gathered in Kuwait to push forward the much-delayed project, whose viability was put in question by the pullout in May of the UAE, the second largest Arab economy after Saudi Arabia.
The central bankers from four states in the union -- Saudi Arabia, Kuwait, Qatar and Bahrain -- will now set a timetable for the creation of a joint central bank, Kuwait's finance minister said, but the summit revealed no details on what authority its forerunner would have.
Mustapha al-Shamali expressed hope the UAE and Oman would rejoin the planned union in the near future, but did not give more details about his country's drive to secure their return during its 2010 presidency of the Gulf Cooperation Council.
Kuwait said on Monday no specific deadline has been set for the launch of the planned single currency, which officials have said could take up to 10 years.
The UAE withdrew from the project in protest at the decision to site the joint monetary council, which will prepare the launch of the common central bank, in the Saudi capital of Riyadh.
Oman, a non-OPEC oil producer, abandoned the project in 2006, saying it could not meet the original 2010 deadline.
Analysts did not expect the two countries to come back at this week's summit as the UAE, embarrassed by the problems of its debt-laden emirate of Dubai, was still bitter about the central bank. Oman has said its decision was final.
However, the UAE's return at a later stage was not completely ruled out if the Saudis offer enough concessions.
"They want to leave the door open (for the UAE and Oman) to come back in," said David Butter, regional director for the Middle East and North Africa at the Economist Intelligence Unit.
"Ultimately a monetary union with all six members in will be a stronger institution than one with only four. But I don't detect any real push on either the UAE side or the Saudi side to bring the UAE back in the short term anyway," he said.
