December 17, 2009
Gulf Petro-Powers To Launch Currency In Latest Threat To Dollar
Gulf petro-powers to launch currency in latest threat to dollar hegemony
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.
The Gulf states remain divided over the wisdom of anchoring their economies to the US dollar. The Gulf currency – dubbed “Gulfo” – is likely to track a global exchange basket and may ultimately float as a regional reserve currency in its own right. “The US dollar has failed. We need to delink,” said Nahed Taher, chief executive of Bahrain’s Gulf One Investment Bank.
The project is inspired by Europe’s monetary union, seen as a huge success in the Arab world. But there are concerns that the region is trying to run before it can walk.
Europe took 40 years to reach the point where it felt ready to launch a currency. It began with the creation of the Iron & Steel Community in the 1950s, moving by steps towards a single market enforced by powerful Commission and European Court. The EMU timetable was fixed at the Masstricht in 1991 but it took another 11 for euro notes and coins to reach the streets.
Khalid Bin Ahmad Al Kalifa, Bahrain’s foreign minister, told the FIKR Arab Thought summit in Kuwait that the project would not work unless the Gulf countries first break down basic barriers to trade and capital flows.
At the moment, trucks sit paralysed at border posts for days awaiting entry clearance. Labour mobility between states is almost zero.
“The single currency should come last. We need to coordinate our economic policies and build up common infrastructure as a first step,” he said.
Mohammed El-Enein, chair of the energy and industry committee in Egypt’s parliament, said Europe’s example could help the Arab world achieve its half-century dream of a unified currency, but the task requires discipline. “We need exactly the same institutions as the EU has created. We need a commission, a court, and a bank,” he said.
Wild Thing's comment...........
This is not good. This is probably the system Obama prefers. As Mark said with this link......"With the trouble the dollar has had and obama a willing dupe for the Crown Prince, we could be in real trouble."
....Thank you Mark for sending this to me.
3rd Mar.Div. 1st Battalion 9th Marine Regiment
1/9 Marines aka The Walking Dead
Posted by Wild Thing at December 17, 2009 03:40 AM
During my entire lifetime, 60 some years, the US Dollar was the most accepted currency in the world. Now we are seeing competing currencies being formed to take over from the dollar. Congress and several presidential administrations have over spent the dollar driving it's value down on world markets. The politicians don't care as long as they get their pet projects funded.
Posted by: TomR at December 17, 2009 10:50 AM
Yeah and if obama is allowed to keep on his spending spree the Peso will have more value than the dollar. Especially, if the FED starts printing more money.
Posted by: Mark at December 17, 2009 04:05 PM
Tom, thank you, this is scary to me.
Mark, yes, and Geithner really wants to push
destroying the dollar.
Posted by: Wild Thing at December 18, 2009 12:13 AM