15 Sep 2011 AFP

Gulf sticks by single currency plan despite debt crisis

DOHA, Sep 15, 2011 (AFP) - Gulf states are determined to forge ahead with their plans for a single currency despite the global debt crisis, the top Saudi monetary official has said, but without giving a date for implementation.

"I have heard doubts (expressed about the single currency) only in the media. It is untrue," Saudi Arabian Monetary AgencySaudi Arabian Monetary Agency

(SAMASAMA) governor Mohammed al-Jasser told reporters following a meeting of Gulf central bank goveenors in Doha late on Wednesday.

"There has been no delay... From the beginning, I have said that there will be no exact date to launch the single currency," said Jasser, who is also chairman of the Riyadh-based Gulf Monetary Council.

"There are mechanisms that must be completed... Citizens and state agencies in our countries must be aware of the requirements before we launch the currency. We are forging ahead but no exact date must be determined," he said.


The march of Gulf (GCC) currency: the design is not abated, and steps on the ground

Posted: September 15, 2011 by THE CURRENCY NEWSHOUND 


Despite the global debt crisis, the Governor of SAMA holds the project hoped, but not locked at any date for launch.
Middle East Online
Jasser: Do not delay nor a specific date

Doha – The Muhammad Al Jasser, central bank governor of the Saudi Arabian Gulf states is determined to move ahead with the single currency project, despite the global debt crisis, without giving a date to begin issuing the currency.
Jasser told reporters after a meeting of the rulers of the Gulf central banks on Wednesday in Doha that “the doubts did not hear in the press, but it is not in place.”

Said Jasser, who administers the Monetary Council (GCC) “There has been no delay, from the beginning said that there will be a specific date to launch a unified currency.”

“There are mechanisms that must be completed .. must be citizens and government agencies in understanding each of our requirements before we start to issue the single currency plan .. we are going steady but we must not put a specific date.”

Has signed a four-nation of the six constitute the Council of the Gulf Cooperation agreement on the single currency, namely Saudi Arabia, Kuwait, Bahrain and Qatar.
Declined to the UAE, which occupies the second economy in the GCC and the Sultanate of Oman signed an agreement. Objected to the choice of United Arab Emirates Riyadh headquarters of the Monetary Council, while the Gulf of Oman announced that it can not provide the required conditions.
Jasser said that the bankers Tbagesoa also in the consequences of the global debt crisis on the Gulf States and the single currency project.

“It is certain that no one can ignore what is happening in Europe now if he would consider entering into a monetary unit.”

The Gulf made little progress in launching the single currency project, which was scheduled in 2010, but economists believe that the road is still long to achieve this. When the debt crisis emerged in the euro zone last year, officials from the Council of cooperation they need to “stop” in the single currency project to study the full consequences of the debt crisis on the economies of their countries. It links five of the Gulf currencies to the dollar, while the Kuwaiti dinar is based on a basket of currencies to the dollar’s share in it.


22 Aug 2011 Emirates 24|7

Eid holidays: Banks to be closed for 3 days; stock markets 5 days

7 days for public sector; 2 days leave with pay for private during Eid
Banks in the UAE will remain closed on the first, second and third of Shawaal on the occasion of Eid Al Fitr.

The UAE has announced that the first and second of Shawwal - the first two days of Eid Al Fitr - will be paid holidays for private sector emplyees.

The Eid Al Fitr holiday for Federal ministries and departments will start on Sunday, August 28 and end on September 4, according to a circular issued by Humaid Obaid Al Qutami, Minister of Education and Chairman of the Federal Human Resources Authority.

Al Qutami congratulated President His Highness Sheikh Khalifa bin Zayed Al Nahyan, His Highness Sheikh Mohammed bin Rashid Al Maktoum, Vice-President and Prime Minister of the UAE and Ruler of Dubai, and Their Highnesses Supreme Council Members and Rulers of the Emirates on the advent of Eid Al Fitr, and wished them good health.

The minister also congratulated the people of the UAE and those of the Arab and Muslim world on the happy occasion.

The first day of Eid Al Fitr will be on Wednesday, August 31, in most Muslim countries, Wam said, quoting Mohammed Shawkat Awdah, head of Islamic Crescents Observation.

 He added, "It is impossible to sight the moon from all regions of the Islamic world because of the setting of the moon before or with the sun, such as North and Central Asia, including the UAE, Qatar, Bahrain, Kuwait and northern and central Saudi Arabia, Iraq and the Levant and North Africa.

He explained that accordingly, the Islamic countries (which started Ramadan on Monday) is supposed to complement, a number of thirty days of Ramadan and the feast will be on Wednesday, August 31st in most Muslim countries.

He added: "As for countries that do not require sighting of the crescent, the first day of Eid Al Fitr will be on Tuesday, August 30."

Eid Al Fitr holiday for financial markets

The Eid Al Fitr holiday for the financial markets will start on Tuesday, August 30 and run until Thursday, September 1, announced the Securities and Commodities Authority (SCA) on Monday.

It added that the transactions will be resumed on Sunday, September 4.

The SCA congratulated President His Highness Sheikh Khalifa bin Zayed Al Nahyan, Vice President and Prime Minister and Ruler of Dubai His Highness Sheikh Mohammed bin Rashid Al Maktoum, Their Highnesses Members of Supreme Council and Ruler of emirates and the UAE people, on the advent of Eid Al Fitr.

© Emirates 24|7 2011

21 Aug 2011 The Saudi Gazette

Job creation in GCC to rise in H2: Survey

JEDDAH - GCC countries are expected to hire new workers in the second half of 2011, a survey conducted by Naukrigulf.com with more than 80 recruiters across the region showed.

Seventy-six percent of respondents said they expected to add new jobs, while seven percent of them anticipated layoffs and only two percent said that there will be no hiring.

Tarun Aggarwal, business head, Naukrigulf.com said: "The region is witnessing a positive hiring environment. The various initiatives by the respective governments as well as rising oil prices have led to creation of new jobs and newer job opportunities. "We expect increased hiring from oil & gas, construction & engineering, IT & telecom and retail sectors. Region-wise, we see more new hirings in Qatar and higher number of replacement hiring in Saudi Arabia."

The survey also revealed the pay rises that organizations gave out to their employees in 2011 with 38 percent of respondents saying that the range of increments was between 5-10 percent and 20 percent saying that the range was between 10-15 percent. The overall sentiment of the Naukrigulf.com Hiring Outlook survey was much more optimistic compared to the same poll a year ago.
© The Saudi Gazette 2011

21 Aug 2011 The Saudi Gazette

GCC to shun economic turbulence

JEDDAH - The six Arab states constituting the Gulf Cooperation Council (GCC)Gulf Cooperation Council (GCC) are well positioned to stay afloat amid the current turbulence in the global economy, according to a bank report.

According to QNB Capital, the current economic turmoil in the US and Europe may have short-term impacts on the GCCGCC -comprising Oman, Bahrain, Kuwait, Qatar, Saudi Arabia and the United Arab Emirates - but the longer term impact will be limited because the economic fundamentals in the region remain strong. Finding that oil prices have been falling, especially due to global uncertainties, it said oil prices are still strong by historic standards and it "does not expect there to be a sustained decline in oil", said the report.

Moreover, GCCGCC governments use conservative oil prices in their budget assumptions and, before the current turmoil struck, were on course to post large fiscal surpluses this year, according to QNB Capital. "The GCCGCC countries' fiscal surpluses and low levels of public debt mean that even if oil prices were to decline, this would not seriously disrupt their spending plans.

This is important, because government spending is the foundation of the region's non-oil economy," it said. Although a weaker dollar, to which GCCGCC currencies are pegged, could increase the cost of imports and boost inflation in the region, it said inflation is currently low in most countries. QNB Capital does not expect the impact from the weaker dollar to be "significant".
© The Saudi Gazette 2011

14 Aug 2011


Gulf nations plan unified building regulations

By Haseeb Haider
 Khaleej Times
ABU DHABI - The Gulf nations plan to have unified building codes. The decision was taken at the 14th meeting of the board of directors of the GCC Standardisation Organisation, which was held last week in Jeddah.

The UAE delegation was led by Dr. Rashid Ahmad bin Fahad, Minister of Environment and Water. The meeting, which was attended by the ministers concerned with Standardisation in the GCC, decided that Qatar will host the technical office responsible for the unified building code project, apart from the coverage of its operating costs.

Furthermore, a decision was taken to setup a high level committee for the draft GCC unified Building Code, in which the national standardisation bodies of the member states take part, in addition to the General Secretariat of the Organization; in order to review and approve of the annual operating plan for the office and study the national mechanisms and methods to prepare the draft unified building code. 

The other decisions, the meeting took, included the approval of draft for 24 Gulf technical regulations, in addition to the adoption of the unified date fore implementing the technical regulation concerning labeling of tobacco products in all member countries of the Organisation.  The authorities will start implementing this technical regulation a year after the adoption date.

Moreover, the Gulf standards for measurement of temperature, humidity and electrical quantities "current, resistance, voltage" were also approved. Also, the measurement standards for mass measurements maintained by the Dubai Central Laboratory in the UAE were approved as reference Gulf mass measurements. The draft guide system for the Rapid Exchange of Information on Product Safety was also adopted, as well as the draft guide for dealing with goods under the system's legislative control products at the customs outlets in the Gulf Common Market.
© Khaleej Times 2011

14 Aug 2011 Press Release

Integrating, not Integrated: A Scorecard of GCC Economic Integration

Richard Shediac.
Richard Shediac.

With the eurozone stalling and protectionist tendencies on the rise worldwide, the merits of economic integration, in which several national economies agree to coalesce into a larger single entity, have recently been called into question. But this context unfairly overshadows the substantial economic and strategic benefits that such integration has brought about in many parts of the world including the EU, which has seen the creation of 2.75 million new jobs and 2.2 percent of additional GDP over a 15 year period--a direct result of integration efforts such as standardization of customs and border regulations that facilitated the movement of goods, services, and labor between countries. In addition, the introduction of the euro and a monetary union has contributed to a 5 percent to 10 percent increase in trade. Another benefit comes in joint R&D efforts which has encouraged public and private sector investments and has spurred economic development. Many of these benefits can directly apply to countries within the GCC.

Middle East, UAE, 14 August 2011 - As the GCC approaches its 30th birthday, the economic integration of the six member countries has not progressed as much as had been expected, a new study from Booz & Company reveals.

"The region has shown admirable growth in the past decade, yet that growth represents the efforts of six individual states, rather than a coherent and aligned group operating as an integrated economic entity," said Richard Shediac, Senior Partner, Booz & Company. "More comprehensive integration has the potential to boost the region's economy much as it did for the EU. In short, there is an opportunity cost to not integrating further."

Booz & Company evaluated the region's level of economic integration based on five core dimensions: the monetary union, customs and borders, intra-regional investment, joint infrastructure and knowledge cooperation. These five criteria were selected to highlight areas that GCC members declared to be priority, and in which action has already been taken, with ratings determined based on  the following:

1 = Major setback to the goal or stagnation of process

2 = Minimal progress toward goal since last action

3 = Some indication of effort and progress toward the goal

4 = Substantial momentum generated toward the goal

5 = Accomplishment or near completion of the goal.

With a score of 2.8, there are clear efforts under way in regard to the monetary union. The GCC established a Gulf Monetary Council in early 2010--an important first step toward a regional authority that can set policy for all six members as a single economicentity. All of the GCC member states, with the exception of Kuwait, have pegged their currencies to the US dollar, which will pave the way for a smoother transition to a common currency if and when it is put into place.

However, the 2010 target date to establish a single GCC currency has passed, and the withdrawal of the UAE and Oman from the proposed common currency is a major setback to its creation. It is difficult to imagine a monetary union and currency regime that excludes two of the GCC's members: Such an effort could ultimately have an adverse effect by creating a two-tiered structure of integration. GCC leaders are leaving the door open for further discussions.

A critical step for GCC nations to achieve monetary union is to establish a robust system of payments and strong links among financial markets, by harmonising legal and regulatory infrastructures. To that end, the GCC countries should invest in compatible statistical institutions at both the national and regional levels, perhaps akin to the Eurostat of the European Union. The ability to gather and analyse macroeconomic data is a key requirement for harmonising regulatory policies and risk management practices - as the Greek debt crisis in the EU shows.  ,

Booz & Company ranked this dimension 3.0 based in part on the fact that intra-GCC trade has grown tenfold since the GCC's founding. After the Customs Union agreement of 2003, for example, intra-GCC non-oil exports between 2004 and 2008 increased by 27 percent annually, compared to only 20 percent for the rest of the world over the same period. 

However, intra-GCC trade has never exceeded 10 percent of total trade for the region. By comparison, blocs such as ASEAN and EU-15 generate 23 percent and 57 percent, respectively, of their overall trade from within their regions.

GCC governments are making an effort to ensure that future trade flows more smoothly. "Although disagreements have arisen over issues such as the sharing of tariff revenues and wait times at border crossings, there is willingness among GCC countries to remove these obstacles and news reports indicate a determination to resolve all outstanding customs issues by 2015. Several member countries have already begun to automate their customs procedures, though these efforts must be coordinated to create a single GCC-wide window in which all member states can share trade information and documentation," stated Hatem A. Samman, Director, Ideation Center.

In terms of labor flow between GCC countries, as of 2007, just 27,000 GCC nationals--a mere 0.2 percent of the estimated labor force of about 15.6 million--were working full-time in other GCC member states. This number is expected to increase, however, given a recent decision to allow GCC companies to open branches in member states, which will likely foster more movement of citizens across borders.

The GCC has witnessed an unprecedented rise in intra-regional investments over the past eight years, earning this dimension a score of 3.0. In previous decades, FDI flow between GCC countries was minimal--only $3.6 billion between 1990 and 2003, for example, or a mere 2.9 percent of the aggregate regional FDI outflow of $125 billion. However, since the surge in oil prices beginning in 2003, the amount of cross-border investments has increased significantly, especially in the telecom sector. Indeed, GCC M&A activity has been quite robust across sectors, growing to over US$26 billion from between 2000 and 2008.

Yet this increase in regional investment has happened despite a lack of formal coordination, and overall financial integration for the region remains inconsistent.  "To further enhance intra-regional investment, the GCC should work to harmonize laws on the investment and ownership of GCC companies in all sectors," Shediac said. "The GCC should also encourage foreign direct investment, and it should promote and grow the private sector, with a particular emphasis on measures to diversify national economies away from their reliance on hydrocarbon revenue."

With a score of 3.6, this dimension is the most integrated of the five. Multi-billion dollar projects in oil and gas, road, railroads, and electricity have been announced, with several significant milestones having been reached. In transportation, Qatar and Bahrain are planning a US$4 billion causeway and high-speed rail link that will connect the two countries, and Oman is planning a super-expressway to connect Muscat with the UAE, planned to open by 2015. As a whole, the GCC is planning a 2,117km railway network at an estimated cost of US$25 billion, to be built by 2017. Bahrain, Kuwait, Qatar and Saudi Arabia are making major additions to their existing airports and all, with the exception of Saudi Arabia, have signed some form of open skies agreement, though the GCC is still waiting for an open skies agreement that will permit fully free movement of people and goods within the region.

Many of the infrastructure projects are extremely ambitious - current infrastructure plans in the region have been valued at more than $1 trillion - at a time when some construction efforts in the region and worldwide have been subject to delays or cancellations.  Therefore, the GCC should consider creating an infrastructure monitoring board to evaluate and spur progress on large-scale regional infrastructure projects. The region must also build on the success of interconnection projects, such as expanding the electricity grid to include Oman and the UAE by the end of 2011.

This dimension, with a score of 2.3, has the greatest opportunity for improvement. Individually, GCC countries have built impressive new educational institutions and invested heavily in R&D, with facilities in Oman, Saudi Arabia and Qatar developing new healthcare and energy technologies, while the UAE has established new entities such as Masdar and Dubai TechnoPark to spur innovation through R&D.

Yet despite these initiatives, the overall region has fallen short of its vision for an integrated, high-quality education system and R&D cooperation. "There are no common GCC-wide programs for digital education content and services, and despite the establishment of foreign university satellites attracting high education students from across the GCC, competition among regional institutions has hindered their mutual cooperation," commented Samman. "In R&D, the GCC has not developed a flagship regional institute for joint R&D spending akin to that of the EU, despite the common economic and social interests  of member states. The GCC should establish a regional research institution, akin to the European Research Council, to promote, fund, and assess collaborative projects. The region also needs to involve the private sector in R&D projects via incentives that give companies the opportunity to contribute to transnational research and development."  

With a score of 2.9 on overall economic integration, the GCC has reaped substantial benefits from closer integration since its establishment. Yet this scorecard of core issues shows that there is much work remaining before the region is truly integrated. A wider economic landscape and a more harmonized financial system will allow the GCC to exploit economies of scale, attract FDI, and negotiate favorable agreements with larger economic counterparts such as the EU. As global economic competition intensifies, GCC countries must strive for broad economic integration, which will enable the six member states to better face future socioeconomic challenges.


About Booz & Company
Booz & Company is a leading global management consulting firm, helping the world's top businesses, governments and organizations. Our founder, Edwin Booz, defined the profession when he established the first management consulting firm in 1914.

Today, with more than 3,300 people in 60 offices around the world, we bring foresight and knowledge, deep functional expertise, and a practical approach to building capabilities and delivering real impact. We work closely with our clients to create and deliver essential advantage. The independent White Space report ranked Booz & Company #1 among consulting firms for "the best thought leadership" in 2010.  

For our management magazine strategy+business visit strategy-business.com.

For the Ideation Center, Booz & Company's leading think tank in the Middle East, visit ideationcenter.com.

Visit booz.com and booz.com/me to learn more about Booz & Company.

About the Ideation Center
The Ideation Center is Booz & Company's leading think tank in the Middle East with the mission to spearhead innovative research and idea generation on prominent socio-economic topics in the region. The Ideation Center is fully supported by the firm's management and underscores Booz & Company's unsurpassed commitment to the advancement of the Middle East.

The goal of the Ideation Center is to support policy makers and business leaders in exploring the topics that have the highest impact on their sectors. The Ideation Center combines primary research with hands-on expertise from the professional community in the private and public sectors to deliver ideas that endure - true to the Booz & Company mission.

The Ideation Center thought leadership is based on insightful research that is revealing and innovative, determined analysis that is focused on the salient topics in the region, engaged dialogue that is true to the Middle East dynamics and ascertained ideas that can make a difference. The end result is one that inspires, enriches, and rewards.

To learn more about the Ideation Center, visit  ideationcenter.com

Booz & Company
Richard Shediac
Hatem A. Samman

Theodore Halabi
Tel: + 971 4 3676152
Fax: + 971 4 3672615

© Press Release 2011

from MS&L Dubai

03 Aug 2011 The Saudi Gazette

GCC financial markets show 'mixed prospects'

JEDDAH - Quite apart from the growing risks evident in the global economy, the regional turmoil known as the "Arab Spring" resulted in sharp stock market corrections and an extreme dearth of new issuance activity in the equity, bond, and sukuk markets alike, NCB said in its report "GCC Financial Market Quarterly: Back to Square One".

In an encouraging sign, however, things rebounded relatively quickly towards the end of Q1: stock indexes returned to pre-crisis levels and volumes in fact rose even more, back to figures last seen in the first half of 2010. But after this revival, the second quarter of the year has offered a much more mixed picture. While there have been some unequivocally positive developments, especially in the sukuk space, the positive momentum has been repeatedly tested and given way to a much more stagnant and uneven picture.

A clear positive momentum in bank lending is now underway in Oman, Saudi Arabia, and Qatar.
Saudi Arabia is the only regional economy to be witnessing a positive trend in private credit which rose at an annual pace of 7.8 percent in June. Overall bank credit in the Kingdom expanded by 7.2 percent Y/Y, highlighting the diminishing role of public sector credit which earlier during the crisis was the main area of dynamism.

While Qatar is still seeing fast growth in bank credit, the pace has declined steadily in recent months to reach 10.1 percent Y/Y in May. Omani credit growth was in fact by a whisker the highest in the region - 10.2 percent - in May. However, the positive momentum is above all linked to public sector credit with loans to the private sector advancing by a more modest 6.1 percent.

By contrast, credit in the UAE is still very measured - at 1.9 percent Y/Y in April - as banks face ongoing regulatory pressures. Kuwaiti credit growth was even slower at 1.1 percent Y/Y in June while Bahraini bank lending actually contracted by 1.2 percent Y/Y in May.

But all is not well with the GCC economies as shown by trends in the area of bank lending, the report said.

In spite of a temporary recovery in the regional stock markets this spring, equity issuance remains very subdued. Although IPO activity rebounded from the depths of only one AED66 million ($17.9 million) issuance seen during Q1, there were only three offerings in the region during the April-June period as two UAE companies and one Saudi issuer came to the market.

The quarter saw a total IPO value of $346 million, as compared to $409.2 million a year earlier. Clearly, the regional IPO stream is far from returning to its pre-crisis rate or even the levels seen last year.
The UAE IPOs during the quarter were by a small takaful insurer Wataniya which raised AED82.5 million ($22.4 million) and by the real estate developer Eshraq Properties Co of Abu Dhabi which raised AED825 million ($225 million).

Saudi Arabia saw an issue by Saudi Integrated Telecom Co. in May. The company floated 35 percent of its total authorized capital of SR1 billion. SITC provides services in fixed line telecommunications, broadband, and other areas.

In addition, Saudi Arabia saw a significant follow-on rights issue by the Makkah-based Jabal Omar Development Company (JODC) which offered 258 million shares with a nominal value of SR10 each. All four issues were significantly oversubscribed. The pipeline offers prospects of some pick-up in the momentum, although probably not significantly so.

The mixed prospects are partly due to a renewed loss of momentum in the regional stock markets during Q2. All the GCC markets lost ground during the first half of the year with the declines ranging from 0.6 percent in Abu Dhabi and 0.7 percent in Saudi Arabia to 10.7 percent in Kuwait and 12.4 percent in Oman. Also the positive trends in volumes were reversed by June, as a result of which the GCC markets lost a total of $33.4 billion of their aggregate capitalization during the first half of the year.

The Kuwait Stock Exchange accounted for a lion's share of this - $17.7 million - as a result of a 13.4 percent drop. Saudi Arabia and Qatar were the most resilient regional markets, falling by 0.4 percent and 1.3 percent, respectively. The UAE and Bahraini exchanges lost 7.1 percent of their capitalization and the Omani bourse shed 10.2 percent.

Even though bond and sukuk markets have thawed, the momentum of 4Q10 has not been matched in spite of significant refinancing requirements. The market conditions are much more benign with historically low yields and a convergence between bonds and sukuk. This, among other things, encouraged the Government of Dubai one to return to the market in a welcome sign of normalization. The second quarter saw five GCC bond/sukuk issues in excess of $500 million in value and one that fell just short of that.

Issuance in the conventional space was led by Mubadala ($1.5 billion), Emirates airline ($1 billion), and the Government of Dubai ($500 million).

In the Shariah-compliant segment, the most important issuers were the Islamic Development Bank ($750 million), HSBC Bank Middle East ($500 million), and Sharjah Islamic Bank ($400 million).

In total, the conventional space saw five issuances with an aggregate value of $3.39 million. Excluding ongoing short-term issuances by the Central Bank of Bahrain, there were four sukuk issuances with an aggregate value of $2.18 billion.

Compared to Q1, this represented mixed progress. Excluding the exceptional QAR50 billion bond and sukuk issuance by the Government of Qatar, the corresponding figures in were $4.79 billion in the conventional space and $1.30 billion in sukuk.

In terms of jurisdictions, issuance activity was dominated by Abu Dhabi which has generally been the main source of issuance in the region during entire first half of the year. Overall, UAE names accounted for just under three-quarters of total bond and sukuk issuance during Q2.

By contrast, Saudi names - with the exception of the Jeddah-headquartered Islamic Development Bank - were notable through their absence. Consequently, the positive market trends had an unusually narrow geographic footprint. In terms of sectors, sovereign issuers made just under half of the total.

The share of financial service was a little over a third. In spite of the continued market volatility, there is substantial pipeline of regional bond and sukuk issues. Much of this is now driven by refinancing requirements with an estimated $157.4 billion worth of outstanding corporate and sovereign bonds as of Dec. 31, 2010. $102.2 billion of the outstanding debt is due to mature by the end of 2015.

Other sources of capital are, similarly, at historically lower levels. Syndicated loan activity fell to less than half of the levels seen in Q1, from $20.9 billion to $8.9 billion, although the figures for the first three months of the year had been skewed by restructuring deals.

Activity in Q2 was led by syndications for Zain KSA, the Government of Dubai, and Saudi Electricity Company. Private equity deals were minimal with only one purchases recorded in the region. Even as the regional macroeconomic fundamentals look benign, the backdrop of global economic uncertainty still makes for an environment where the recovery is proving frustratingly slow in coming.

Moreover, HSBC Gulf Cooperation Council (GCC) Business Confidence Index revealed that overall business confidence in the Middle East has decreased by two points in Q1.

The survey findings reflects a relatively positive picture of business health in the GCC. Over half of businesses still remain optimistic about revenue growth over the coming six months, at 54 percent, with a further 27 percent remaining neutral.
© The Saudi Gazette 2011

03 Aug 2011

 GCC stock markets lose USD 16 bln in July
KUWAIT, Aug 3 (KUNA) -- An Asset Management Company (KAMCO) report said that the Gulf Cooperation Council (GCC) countries' stock markets lost more than USD 16 billion in the past month of July, reaching a loss of USD 28 billion in the first half of the fiscal year 2011. The report, issued on Wednesday, added that each GCC stock market has its own defining factors at play. For example, lack of liquidity in the Kuwait Stock Exchange (KSE) and the investors' anticipation in a new bourse legislative and organizational body led to a state of haitus in the UAE markets. Things were made worse by the decision of raising the US debt ceiling to USD 14.3 trillion, which shook up the US dollar against major currencies and also affected the US sovereign debt since many countries have investments within the US treasury bonds and the US debt. GCC markets loss in value so far into 2011 reached USD 44 billion. The greatest loss was suffered by the Kuwaiti market, which shed USD 23 billion, while the Saudi market lost USD 13.8 billion to reach USD 340 billion of its market value. Losses were much less in the UAE and Qatar markets, which came to a combined USD 3 billion. Omani and Bahraini bourses suffered the least by USD 2.5 billion and 1.7 billion, respectively.

03 Aug 2011


Second half of 2011 outlook for GCC largely 'neutral', says Markaz

MUSCAT -- Kuwait Financial CentreKuwait Financial Centre (MarkazMarkaz) has issued the semi-annual review of its "What to expect in 2011" report in which the authors have discussed the myriad triggers that negatively impacted the GCC markets in the first half of 2011 and how they altered MarkazMarkaz's outlook on the markets for the remainder of 2011.

In MarkazMarkaz's previous note, the authors had upgraded their outlook to a mostly Positive view on the region. This was due to many factors including; healthy economic growth, expected recovery in key sectors like Banking and Real Estate in addition to healthy valuations.

The report had a Neutral stance on Dubai (due to persisting debt overhang and a struggling Real Estate sector), Bahrain (due to lesser corporate recovery), and Saudi Arabia (due to muted banking performance and investor sentiment).

Since then, the political turmoil which swept the region at the beginning of the year brought down all markets and proved a drag on earnings. Additionally, various corporate issues (in terms of M&A, debt restructuring etc) in addition to some regulatory and market developments (Kuwait CMA, MSCI not upgrading of UAE and Qatari markets etc) has dampened investor sentiment across the board.

For the rest of 2011, the report has adopted a rather neutral view of the markets due mainly to muted earnings growth and lacklustre market liquidity and activity.

The authors remain positive on Abu Dhabi and Qatar due to positive economic growth and earnings potential.

Saudi Arabia -- neutral

The report maintains a neutral outlook on Saudi Arabia for 2H11 due to moderate economic activity (especially inflation and the fiscal balance) in addition to moderate earnings growth. Positive factors arise in valuation and market liquidity which has been picking up. The 2011 Saudi fiscal budget is expected to run a deficit of $10 bn, with spending forecasted at $154.7 billion (7 per cent lower than actual 2010 expenditures of $167 billion).

The budget is expected to show increased infrastructure spending. The Kingdom's $385 billion, 5-year development plan is expected to spur economic activity by encouraging construction/real estate projects, which in turn should spur lending by banks. The program includes housing, ports, and upgrading the educational system.

Additionally, the government has ramped up spending on welfare programmes and Saudisation plans in order to quell civil unrest and address its unemployment issues.

Consequently, the fiscal balance is expected to drop from 13 per cent of GDP in 2011 to 9 per cent in 2012.

As for corporate earnings, these are expected to be flat in 2011 versus a 30 per cent growth in 2010 (which was largely driven by commodities).

Support is expected to come from the Banking sector, which are estimated to grow at 10 per cent in 2011 while slower growth in telecoms may be a drag on overall earnings. Investor sentiment (as measured by Bayt.com) was up 13 per cent as of March 2011 while the geopolitical outlook (as measured by EIU) remains stable despite some signs of unrest at the beginning of the year.

As previously mentioned, market liquidity is up in the Kingdom. Value Traded came in at $155 billion for first half 2011, a 28 per cent YoY growth, which would translate to over $300 billion if the pace keeps up to the end of the year.

Kuwait -- neutral

The authors have downgraded the outlook on Kuwait from Positive to Neutral for the remainder of 2011 due to poor market conditions, more muted earnings growth and continued weakness in market liquidity.

The economy is expected to grow by 5.3 per cent in 2011 following a growth of 2.3 per cent in the previous year, aided by high oil prices and increased government spending. This growth is expected to be maintained through 2012. Inflation, which is expected to have jumped to 6.1 per cent in 2011, due to subsidies and grants, is forecasted to come back down to 2.7 per cent in 2012. This is below the long-term average of about 4 per cent.

Fiscal and Current Balances are expected to remain the highest in the Gulf, at 23 per cent and 37 per cent of GDP, respectively, in 2011 and holding steady through 2012.

Corporate earnings in Q1 were fairly positive; aggregate net profit was at $2.14 billion, boosted by extraordinary telecom earnings and a return to positive results for the financial sector. However, full year 2011 results are expected to come in at $5.6 billion, a 3 per cent decline from last year.
UAE -- Abu Dhabi: positive, Dubai: neutral

The authors remain Positive on Abu Dhabi while being Neutral on Dubai. The economy grew at an estimated 2.4 per cent in 2010 and is expected to show a growth of 3.3 per cent in 2011 followed by 3.8 per cent in 2012. Inflation is expected to jump to 4.5 per cent in 2011 versus 2 per cent in 2010.

The geopolitical and regulatory arenas are considered to be stable. However, lack of liquidity remains a problem as value traded in the UAE continues to dry up.

Corporate earnings are expected to rebound in 2011 after the Real Estate sector suffered a significant loss in 2010 (due to Aldar Properties). 1Q11 was a little weak, aggregate net profit was at $2.8 billion, a 1 per cent decline. However, a return to profitability in the Real Estate segment should push aggregate net earnings in 2011 to $10.2 billion. Banks are expected to show a net profit of $5.36 billion, a 17 per cent annual growth.

Qatar -- Positive

The authors remain Positive on Qatar owing to its high economic growth prospects, healthy banking sector and heavy government support in addition to increasing liquidity. The economy is expected to show another year of double-digit growth, boosted to a forecasted 20 per cent in 2011 (due to high commodity prices) before falling back to a more sustainable 7 per cent in 2012.

1Q11 net profits came out to $2.4 billion, a 23 per cent YoY growth. Corporate earnings are expected to continue growing at a healthy pace to $8.5 billion by the end of the year, which would translate to an annual growth of 12 per cent.

Bucking the GCC trend; Qatar value traded grew in 1H11 to $12.95 billion, a 33 per cent YoY growth. Should the government be successful in raising Foreign Ownership Limits (a prerequisite for MSCI Emerging Market inclusion), liquidity could increase significantly in the coming year.

Oman -- Neutral

The outlook on Oman has been downgraded from Positive to Neutral due to the political situation which impacted corporate earnings, sentiment and geopolitical perception.

Real GDP is expected to have grown at 4.7 per cent in 2010 to decline to 4.4 per cent in 2011 and down to about 4 per cent in 2012 as economic growth slows. Consequently, inflation is also expected to decline through the years; it is forecasted at 3.5 per cent in 2011 before declining to 3 per cent in 2012.

Corporate earnings in Oman were impacted by the political turmoil at the beginning of the year, coming in at $338 million, a 26 per cent YoY decline. Some weakness is expected to remain throughout the year, specifically in the financial services and Telecom sectors, with full year net earnings at $1.5 billion, a 5 per cent annual decline.

Bahrain -- Neutral

The report gives a Neutral outlook on Bahrain, but verging on Negative due to weakened corporate earnings outlook in addition to a less than favourable geopolitical environment which is negatively impacting investor sentiment and market liquidity.

The report provides an outlook for 2011 by using the six forces framework which includes 1. Economic Factors, 2. Valuation Attraction, 3. Earnings Growth Potential, 4. Investor Sentiment, 5. Geopolitical Developments, 6. Market Liquidity.

Economic Factors: GDP Growth: Real GDP across the GCC is likely to show a growth of about 5 per cent in 2011 followed by a growth of between 5 per cent-7 per cent in 2012. Growth in 2011 has been driven by spiking crude oil prices at the beginning of the year coupled with some return in private credit and broad money growth in addition to increased government spending.

Growth in Saudi Arabia is expected to show a surge of 7.5 per cent in 2011 due to high oil revenues, however, this is expected to fall to about 3 per cent in 2012. Kuwait GDP growth is expected to remain stable at about 5 per cent for 2011/2012.

Qatar, which has had the world's highest growth rates over the last few years is expected to show another year of double digit growth at 20 per cent for 2011 before dropping to the more sustainable 7 per cent in 2012.

Inflation: Both Saudi Arabia and Kuwait saw jumps in inflation during 2011 due to government grants and subsidies; according to the IMF, CPI is expected to show an increase of 6 per cent for each country in 2011. This should moderate in 2012 as economic growth slows; coming in at 5.6 per cent for Saudi Arabia and 3 per cent for Kuwait.
© Oman Daily Observer 2011

03 Aug 2011

 GCC should stop pricing oil in US dollars, says DIFC chief economis
By Gulam Ali Khan
As the US debt situation has revived concerns about the strength of the US dollar, the Dubai International Financial Center (DIFC) Authority has advised GCC countries to move away from pricing oil in dollars towards a basket of currencies that would include the Chinese yuan.

Commenting on the impact of US monetary policy on GCC economies, Dr Nasser H Saidi, chief economist and head of external relations of DIFC, told Muscat Daily that to avoid the danger of deep depreciation of the dollar, GCC countries should move away from pricing oil in US dollars towards a basket of currencies that would include the yuan.

"Indeed, I am in favour of using the yuan for clearing and settling all GCC trade with China, who has become our biggest trade partner."

China is the largest buyer of Oman's crude oil. It imported 36mn barrels of oil from Oman during the first four months this year, accounting for 40 per cent of Oman's total oil exports.

Except Kuwait, which has its currency pegged to a basket of six currencies, all other GCC countries keep their currencies pegged to the US dollar.

The depreciation of the dollar, on one hand, makes imports costly in GCC countries, which may fuel inflation, and also drive the value of oil exports down as it is priced in US dollar in the international markets.

Dr Saidi said that to mitigate the looming risks, GCC countries should move to diversify their international reserve holdings and set up a common currency.

"The risk is a large depreciation of the US dollar which would imply rising inflation rates in the GCC countries and a reduction in the real value of their [largely US dollar] international reserves and net foreign assets."

"With the onset of the great financial crisis, US monetary policy has been geared to bailing-out the US banking and financial sector through massive injections of liquidity (QE1, QE2 and maybe QE3 next) and maintenance of low levels of interest rates."

"The external value of the US dollar is a matter of benign policy neglect. Indeed there is a deliberate policy to drive down the value of the dollar in order to revive exports and reduce the trade and current account deficits."

"The fixed exchange rate policy implemented by GCC countries and the implied dependence of domestic monetary policy on US Fed policies, means that there is no real room for manoeuvering GCC interest rates independently from US rates," he added.

© Muscat Daily 2011

02 Aug 2011
Gulf News

Dollar peg needs to be rethought

Tuesday, Aug 02, 2011

Gulf News

Dubai GCC governments need to consider new ways of reducing their exposure to the US dollar, local economists said yesterday.

The currencies of the UAE, Saudi Arabia, Bahrain, Qatar and Oman are all pegged to the greenback, which has depreciated in value against all the world’s major currencies in recent weeks.

Kuwait dropped the dollar peg in 2007 and switched its exchange rate mechanism to a basket of currencies in a bid to tackle rising inflation; a move that some analysts say other GCC countries should consider following.

The dollar rallied briefly yesterday after President Barack Obama announced that congressional leaders had reached an agreement to avert a debt default but soon reversed gains, hitting a record low against the safe-haven Swiss franc.

The political fallout between Democrats and Republicans over the country’s $14.3 trillion (Dh52.5 trillion) debt ceiling, which is set to rise by up to $2.4 trillion, has left its mark on the GCC and led to increased nervousness about the region’s exposure to the dollar.

Dollar dependence

“Once the dust settles, the GCC countries have to seriously start thinking about lowering their dependency on the US dollar peg,” said Mohammad Ali Yasin, chief investment officer at CAPM Investment.

“Kuwait is pegged roughly 70-80 per cent to the dollar and approximately 20 per cent to a mixed basket of other currencies. Even if they [GCC countries] have no immediate plans, the speculation over the dollar peg is a long-term problem. All the gains that are being made from high oil prices will be countered by a depreciating dollar,” he added.

Ali Yasin said Gulf investors are looking to reduce their exposure to the dollar whilst actively diversifying cash into other investment vehicles.

“There is no guarantee the dollar will return to its previous value; it could remain devalued against all the major currencies, which would have a knock on effect for the region,” he said.

“Nobody is saying anything at the moment because it would increase volatility and further unsettle the situation. But actual plans have to be put in place and the GCC countries have to find ways of lowering their risk to the negative effects of the dollar on their currencies and earnings,” he added.

According to Ali Yasin, imports to the GCC will also be impacted by the US debt situation with rising inflation affecting the cost of essential goods across the region.

“The situation will become clearer in 2012. We might not see the effects of inflationary increases immediately but the region’s economy will suffer unless member states find a way of lowering their dependency on the dollar,” he said.

The UAE Central Bank said last week it remained committed to the currency peg between the dirham and the greenback, adding that the dollar was exposed to price fluctuations like all major currencies.

Common approach

“The most likely scenario of a change in the currency regime in the Gulf countries would be a common, simultaneous approach from the group, which would happen after progress has been made on the monetary union front,” said Philippe Dauba-Pantanacce, senior economist for global markets, Middle East and North Africa, at Standard Chartered Bank

“But the monetary union project has stalled. Furthermore, there seems to be no appetite for a currency regime reform. As of today, it would be a major step into the unknown and much more technical capacities would need to be built locally to start running an independent — or quasi independent — monetary policy,” he added.

According to Dauba-Pantanacce, the reason Gulf countries have not announced any immediate plans to depeg from the US dollar is because revenues are measured in the currency, which contends a lot of the possible problems arising from potential dollar movements.

“No market is more transparent, liquid and deep than the US market. So even in the event of a downgrade we do not think that it will pose a real challenge to the supremacy of the US Treasury as the world financial asset benchmark,” Dauba-Pantanacce said.

Dollar continues fall

The dollar fell 0.5 per cent versus the Swiss franc to 0.78153 francs on the Electronic Broking Services (EBS) trading platform, well below last week’s record low of just above 0.7850 francs. Broad demand for the Swiss currency also pushed the euro to a fresh record low of 1.12628 on EBS.

“The dollar has already fallen a long way over the last decade in trade-weighted terms. Of course, this does not mean that it cannot fall further,” said Pradeep Unni, vice president at Richcomm Global Services, Dubai Multi Commodities Centre in note to investors.

“We do see more upside for the Swiss franc. But the dollar is looking increasingly under-valued relative to other major currencies, notably the yen and the euro, which we expect to drop back to ¥85 and $1.40 respectively by year-end and fall further in 2012,” Unni added.

By Kevin Scott?Staff Reporter

© Gulf News 2011. All rights reserved.

27 Jul 2011


Gulf residents would feel the impact of default

Wednesday, Jul 27, 2011

As the United States lurches towards fiscal catastrophe, local economists have warned of dire consequences for the GCC if the world’s largest economy fails to avoid defaulting on its massive debts.

Residents across the Gulf would feel the impact of a US default as it would likely lead to a depreciating dollar, which five out of the six GCC states are pegged to, as well as higher interest rates on mortgages, credit cards and loans.

The previously unthinkable possibility of the world’s richest nation defaulting on its debts is now a very real likelihood and global markets are looking on with increasing unease at the political deadlock.

John Sfakiankis, chief economist at Banque Saudi Fransi, said there are two direct implications of a US debt default for the GCC. “The US dollar would drop in value, which would impact the region because most GCC currencies, including the UAE dirham, are pegged to it,” he said.

Market valuations

“Secondly, the Gulf countries hold US foreign debt and the yield on US Treasuries will continue to depreciate, which would impact the market to market valuations for US Government debt,” he added.

According to Sfakiankis, further questions will also be raised about the dollar and in particular how it will impact on the region in terms of governments and companies holding US assets.

Further questions will be raised about the dollar and how it will affect governments and companies holding US assets, Sfakiankis says

“The Gulf countries will certainly feel the impact of any additional inflationary pressure in the US. However, the US market is resilient and there is still time for a resolution to be found. In terms of credit I do not think the US will necessarily default,” he added.

By Kevin Scott, Staff Reporter

© Gulf News 2011. All rights reserved.

The GCC CU stands for "Gulf Cooperation Council  Currency Union"

This is outrageous, Iraq just turned down the invitation to join the GCC!


Omani minister: Iraq's “unwise” political approach behind GCC rejection

16/05/2011 12:03 Cairo, May 16 (AKnews) – Iraq’s rejected bid to join the Gulf Cooperation Council (GCC) was due to its “unwise” political approach, said the Omani minister of foreign affairs on Sunday. gcc - logo

Speaking at a joint press conference with the Secretary-General of the Arab League following a meeting of Arab foreign ministers in Cairo, Yusuf  bin Alawi told AKnews that Iraq’s Arab identity was not in question, but its inappropriate policies were behind the GCC rejection.

Although Bin Alawi did not disclose exact details of Iraq’s “unwise” political approach, it is believed that the stance taken by Iraq’s Shia political blocs over the public protests in Bahrain over recent months underlies the GCC’s decision.

Although the Iraqi government has not taken an official stance on the issue, Scores of Iraqi Shia leaders and deputies have condemned the Sunni-dominated Bahraini government’s crackdown on the Shia-majority opposition who are demanding greater Shia representation and political reform.

A number of Iraqi parliamentarians have also sharply criticized the deployment of thousands of GCC troops in Bahrain and formed a pressure group to support the Bahraini opposition.

The controversial Shia Iraqi backing of the Bahraini opposition underlines Iraq's emerging role as a prominent Shia Arab power.

Iraq’s rejection from the GCC runs the risk of deepening the growing sectarian divide in the region.

It could also pose a threat to ongoing reconciliatory efforts between Iraq and neighboring Kuwait, a prominent GCC member, to reinforce bilateral relations after the Saddam Hussein-led Iraqi invasion of Kuwait in 1990.

The Gulf Cooperation Council (GCC) was formed in 1981 to collectively confront the security challenges to the Gulf States. Their immediate objective was to protect themselves from the threat posed by the Iran-Iraq War and Iranian-inspired activist Islamism.

Beginning with a force of about 5,000 predominantly Saudi troops, the GCC steadily grew and embraced additional countries as its mission became more defined. Egypt and Syria joined the GCC in 1991.

Following the signing of the peace treaty in 2000, the GCC included 18 states and today has a force of around 30,000 troops, including 21,000 combat soldiers.

Iraq's rejection, despite its close geographical proximity to the Gulf States, coincides with the announcement that Jordan and Morocco have been integrated into the Council.

By Karl Allen (AKnews) - Sara Ali contributed to this report

GCC foreign assets to gain $195bn in 2011

GCC foreign assets to gain $195bn in 2011
By Nadim Kawach
Report says high oil prices will also sharply widen Gulf current account
Strong oil prices will sharply widen the external fiscal balance of Gulf hydrocarbon exporters in 2011 and this will boost their foreign assets by a staggering $195 billion at the end of the year.

The surplus in the combined current account of the six-nation Gulf Cooperation Council (GCC) already swelled by nearly $161 billion in 2010 after crude prices surged by at nearly $15 above their 2009 level, the Washington-based Institute for International Finance (IIF) said in a report on the Arab region.

With oil prices now hovering at above $100 and most GCC members are pumping crude at higher levels to offset disrupted Libyan oil supplies, their current account surplus is expected to rise to one of its highest levels in 2011.

The UAE's surplus is projected to nearly double this year while there will be sharp rises in Saudi Arabia and other GCC members, IIF said.

"The GCC's overall current account balance is expected to widen from an estimate of $129 billion in 2010 to $292 billion (equivalent to 22 per cent of GDP) in 2011. Hydrocarbon exports will rise from around $448 billion in 2010 to $681 billion in 2011," IIF said in the report, obtained by Emirates 24/7.

Non-hydrocarbon exports will also increase significantly to $214 billion (mainly petrochemicals from Saudi Arabia and re-exports from the UAE), it said.

Imports of goods are projected to increase by 18 per cent to $414 billion, well above the previous peak of $368 billion reached in 2008.

"Consequently, gross foreign assets of the GCC are projected to rise from $1.5 trillion to $1.7 trillion in 2011, against foreign liabilities of $0.5 trillion."

The report said at least 75 per cent of the region's financial assets are held by countries that are not subject to unrest, including Saudi Arabia, the UAE, Qatar, and Kuwait. More than one-third of these assets are held by sovereign wealth funds (SWFs), including the Abu Dhabi Investment Authority (ADIA).

IIF said that while most of these assets are currently invested in the international financial system, there had also been a rising interest in the domestic and regional markets until recent events.

"With relatively low external debt, the large net foreign assets ($1.2 trillion) of the GCC will continue to provide governments with the flexibility to support growth through robust government spending levels in the next few years."

In the oil importers, the external current account deficit is projected to widen from 4.3 per cent of GDP in 2010 to 5.7 per cent in 2011, the report showed.

It said the deterioration is due to a sharp drop in earnings from tourism, particularly in Egypt, Lebanon, Syria, and Tunisia, and a substantial increase in the import bill as a result of high oil prices.

"In Egypt, the disruption to exports and drop in tourist arrivals will widen the current account deficit. This, together with portfolio outflows and a reduction in FDI, has put increased pressure on the balance of payments."

The report said both Egypt and Tunisia (and soon perhaps other countries in the region) are in discussions with potential multilateral and bilateral donors, including countries of the GCC, on possible aid programmes.

"Undoubtedly, financial resources are important at this pivotal moment in these countries' transitions. However, it is equally important that these countries also commit to a medium term framework of reforms that would help secure their long-term growth and prosperity."

A breakdown for the GCC nations showed their combined current account surplus would swell from around $128.5 billion in 2010 to $292.3 billion in 2011.

The surplus is projected to surge from about $21.6 billion to $43.6 billion in the UAE, from $38.8 billion to $113.9 billion in Saudi Arabia, from $39.1 billion to $67.9 billion in Kuwait, from $21.6 billion to $48.9 billion in Qatar, from $0.8 billion to $2.9 billion in Bahrain, and from $6.6 billion to $16.4 billion in Oman.

Their gross foreign assets is expected to soar from around $1,511 billion in 2010 to a record high of nearly $1,706 billion in 2011, the report showed.

It gave no breakdown for each member but showed the GCC's foreign assets accounted for around 73.5 per cent of the total Arab foreign assets of $2,053 billion at the end of 2010. At the end of 2011, the GCC's assets are expected to rise to nearly 76.5 per cent of the total Arab assets of $2,228 billion.

© Emirates 24|7 2011

Here are some excerpts from this document. It is 35 pages in it's entirety and you may read it or download it by clicking on the docu,ent at the bottom of the page.
Are GCC Countries Ready for Currency Union?
Belkacem Laabas and Imed Limam *
April 2002
* Economists


 pg. 1

In May 25, 1981, the countries of the Arab Gulf region, Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, have ratified the charter establishing the Cooperation Council for the Arab States of the Gulf (GCC countries hereafter). In their second Supreme Council meeting held in November 1981, the GCC leaders have adopted an Economic Agreement (EA) setting the stage for a full economic integration. The agreement had set out broad lines for the realization of coordination, integration and cooperation in various aspects of economic affairs. The Council has taken the necessary steps toward realizing the different stages of a full economic integration namely, a free trade area, a customs union, a common market and economic union. The intensification of cooperation in the relevant areas has been achieved through the formation of various specialized committees whose goal has been to implement the guidelines of the main constituent bodies of the GCC (the Supreme Council, Ministerial Council and the Secretariat General).
1 As a first step toward economic integration among the countries of the region, a Free Trade Zone was established in 1983. A decision to move ahead with the next phase of integration, through the establishment of a Customs Union, came at the Riyadh Summit of the Leaders of GCC countries in 1999. A timetable was approved to establish a Customs Union by the year 2005. Already in their Bahrain summit of the year 2000, the GCC leaders have agreed to adopt a common peg for the different currencies of the member states as a preliminary step toward adopting a single currency, considered a cornerstone for achieving full economic integration.
During the last GCC summit December 30-31, 2001 in Muscat, the six GCC countries have agreed to a joint customs tariff of five percent by the year 2003, two years earlier than originally planned, and voted to create a single currency by the year 2010. As an intermediate stage toward establishing a single currency, they have also agreed to have the American dollar as a common peg for their currencies before the end of the year 2002.
pg. 3
First, it important to clarify some of the concepts often used in the literature of OCA. Broadly speaking “an OCA is a region for which it is optimal to have its own currency and its own monetary policy.”2 Therefore, OCA can interchangeably be called Monetary or Currency Union. It involves monetary integration, a single currency and a common central bank controlling the pool of foreign exchange reserves and administrating monetary policy for the union. Monetary integration, on the other hand, involves the irrevocable fixing of the exchange rates, full and complete convertibility of currencies, financial market integration (measures to liberalize capital transactions and harmonize national financial regulations and structures of institutions), the complete liberalization of current transactions and a common monetary policy.3 In the present paper, we assume that CU is the arrangement that the GCC countries are trying to achieve by the year 2010.

You ask yourself, "Does the GCC CU really want Iraq to join?"

UAE may be first Arab nation to restore full ties with Iraq

June 05, 2008

The United Arab Emirates is expected to soon name an ambassador to Iraq and could open an embassy in the war-ravaged nation, Iraqi officials said Thursday.

The move would make UAE the first Arab nation to re-establish full diplomatic relations with Iraq since an Egyptian ambassador was killed there in 2005. Shiite-dominated Iraq has been working to strengthen ties with the Sunni-led Arab world.

The visit by United Arab Emirates Foreign Minister Sheikh Abdullah bin Zayed Al Nahyan took place as the U.S. and other nations urge Arab countries to deploy ambassadors to Iraq, reopen embassies and forge closer relationships with the post-Saddam


Prime Minister Nuri al-Maliki speaks last week at the International Compact on Iraq in Sweden.

This is information clipped from Wikipedia on Iraq and the GCC at  http://en.wikipedia.org/wiki/Cooperation_Council_for_the_Arab_States_of_the_Gulf#Objectives

Not all of the countries neighbouring the Persian Gulf are members of the council; Iran and Iraq are currently excluded, as they are too poor to make sustained contributions. The associate membership of Iraq in certain GCC-related institutions was discontinued after the invasion of Kuwait.[14]


The associate membership of Iraq in certain GCC-related institutions was discontinued after the invasion of Kuwait.[15] The GCC States have announced that they support the Document of The International Compact with Iraq that was adopted at Sharm El-Sheikh on 4–5 May 2007. It calls for regional economic integration with the neighboring states but there is no prospect of Iraqi accession to the GCC.[16]


Yemen is (currently) in negotiations for GCC membership, and hopes to join by 2016, despite the fact that it has no coastline on the Gulf.[17] The GCC has already approved Yemen's accession to the GCC Standardization Authority, Gulf Organization for Industrial Consultancy, GCC Auditing and Accounting Authority, Gulf Radio and TV Authority, The GCC Council of Health Ministers, The GCC Education and Training Bureau, The GCC Council of Labour & and Social Affairs Ministers, and The Gulf Cup Football Tournament. The Council issued directives that all the necessary legal measures be taken so that Yemen would have the same rights and obligations of GCC member states in those institutions.[18] There is, however, some resistance to full Yemeni membership amongst most GCC states, due to the country's poverty, different system of government, and the legality of qat in the country.

Here's another excerpt from Wikipedia concerning the forgiveness debate for Iraq.


In December 2003, President George W. Bush appointed Baker as his special envoy to ask various foreign creditor nations to forgive or restructure the approximately $100 billion in international debts owed by the Iraq government which had been incurred during the tenure of Saddam Hussein.[15]

On March 15, 2006, Congress announced the formation of the Iraq Study Group, a high-level panel of prominent former officials charged by members of Congress with taking a fresh look at America's policy on Iraq. Baker was the Republican co-chair along with Democratic Representative Lee H. Hamilton, to advise Congress on Iraq.[16] Baker also advised George W. Bush on Iraq.[17]

The Iraq Study Group examined a number of ideas, including one that would create a new power-sharing arrangement in Iraq that would give more autonomy to regional factions.[18] On October 9, 2006, the Washington Post quoted co-chairman Baker as saying "our commission believes that there are alternatives between the stated alternatives, the ones that are out there in the political debate, of 'stay the course' and 'cut and run'".

Mark Aldrich,
Jul 26, 2016, 1:07 AM