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KUWAIT Gulf monetary union pact comes into effect

Summit also endorses plan to create force to tackle security threats

By Habib Toumi, Bahrain Bureau Chief, Gulf News
December 16, 2009
Image Credit: WAM

Manama: Gulf Cooperation Council (GCC) leaders concluded their annual summit on Wednesday with an agreement on the monetary union, paving the way for a single currency.

The two-day summit, hosted by Kuwait, also supported Saudi Arabia in its fight against Yemen's Al Houthi group and called on Tehran to respond to the GCC's repeated calls to solve peacefully the issue of the three UAE islands occupied by Iran.

The monetary union will comprise four of the six GCC members. The UAE and Oman opted out of the agreement.

Under the pact, a Gulf monetary council is to be established early next year. The council will develop into a central bank, which will take the required measures to issue a single currency.

Steps

The summit's final communiqué said the leaders have asked the Monetary Council's board of directors to take all the necessary measures to issue the single currency. It did not set a timeline.

The leaders expressed confidence over the ability of their economies to overcome the impact of the global economic crisis. "The summit welcomes efforts taken by the member states to contain the impacts of the global economic crisis and expresses confidence in the strength of the Gulf economies to overcome the impacts of the crisis," the communiqué said.

Speaking at a joint press conference with Kuwaiti foreign minister Shaikh Mohammad Al Sabah, GCC Secretary-General Abdul Rahman Al Attiyah said the six states have agreed to create a joint force for rapid intervention to address security threats. The force would intervene in situations similar to the recent incursion by Yemen's Al Houthi rebels into Saudi Arabia.

Islands' issue: GCC reiterates support for UAE

The GCC on Tuesday also reiterated its full support to the UAE sovereignty over its three islands of Abu Mousa, the Greater and Lesser Tunbs and, their regional waters, air space, continental shelves and economic zone, saying they were an integral part of the UAE.

The communiqué issued at the end of the summit in Kuwait said that the leaders regretted the lack of positive results in the contacts with Iran that would lead to resolving the issue and consequently contribute to reinforcing peace and stability in the region.

The leaders nevertheless said that they would continue looking into all peaceful means that would allow the UAE to regain its rights over its three islands.

"The GCC leaders call upon Iran to respond to the UAE efforts to resolve the issue through direct negotiations or by taking the case to the International Court of Justice. The leaders request Iran to remain committed to the basic premises for establishing good neighbourly relations, mutual respect and non-interference in domestic affairs," the communiqué said.

Iran has consistently refused to take the case of the three islands to the Hague-based International Court of Justice.

The court cannot consider a case without the approval of both parties involved in the dispute.

Monetary Union milestones

  • May 1981 - Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE establish the Gulf Cooperation Council (GCC)
     
  • November 1981 -GCC countries endorse the Economic Agreement
     
  • March 1983 -GCC Free Trade Area launch
     
  • 1983 -GCC countries establish the Governors Committee
     
  • 1986 -Omani riyal formally re-pegged to dollar
     
  • September 1994 -Governors Committee agrees to establish the GCC net (ATM national switches within GCC Countries)
     
  • July 2000 - Qatari riyal formally pegged to dollar
     
  • December 2000 -GCC agree to peg domestic currencies to dollar by the end of 2002
     
  • December 2001
    1. GCC countries endorse the new Economic Agreement including:
    -GCC Customs Union
    -GCC Common Market
    -GCC Common Currency
    2. Bahraini dinar formally pegged to dollar
     
  • 2002
    1. GCC countries establish the Monetary Union Committee 2. Dirham formally pegged to dollar
     
  • January 2003
    1. GCC Custom Union launch
    2. Saudi riyal and Kuwaiti dinar formally pegged to dollar
     
  • December 2005 - GCC countries endorse the economic convergence criteria
     
  • December 2006 -The Monetary Union Committee presents a draft on components and percentages for economic convergence criteria to GCC Supreme Council
     
  • January 2007 - Oman announces a delay in joining the monetary union
     
  • May 2007 - Kuwaiti dinar re-pegged to a basket of currencies
     
  • January 2008 - GCC Single Market inception
     
  • June 2008 - Governors Committee endorse the GCC Agreement of Laws and Regulation of monetary union
     
  • May 5, 2009 - GCC decides to base the central bank in Riyadh
     
  • May 20, 2009 - UAE pulls out from monetary union plan
     
  • January 2010 - GCC Common Currency implementation deadline

    Source: Dubai International Financial Centre

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