UAE could rethink Gulf monetary union if terms change

Vilnus/Abu Dhabi: mUAE's Foreign Minister said on Friday the UAE would consider rejoining a Gulf monetary union if terms change and its neighbours agree to allow a joint central bank to be based in the country.

Shaikh Abdullah Bin Zayed Al Nahyan left the door open for the UAE to rejoin the euro zone-style single currency, two days after pulling out, but did not elaborate on what conditions would have to be met. Speaking to Reuters during a visit to Lithuania on Friday, Shaikh Abdullah said: "If the terms are different, we will look positively to that. At the moment the terms are unacceptable for the UAE, and that's why we decided not to join."

The UAE's Central Bank Governor Sultan Bin Nasser Al Suwaidi said yesterday that the decision of choosing Riyadh as the location for the Gulf Central Bank was political and disregarded the UAE's competitive advantages. In an interview aired by Dubai TV, Al Suwaidi said the decision disregarded the fact that major global banks have branches in the UAE and that 50 per cent of international money transfers in the Gulf region take place in the UAE.

The UAE broke ranks with Saudi Arabia and three other Gulf states last week by withdrawing from the plan in protest of the May 5 decision to base the joint central bank in the Saudi capital. Asked what terms would have to change, Shaikh Abdullah said that until last year, only the UAE had been a contender to host the joint body.

"When I say the terms, the UAE was the first country supposed to host the central bank, and we believe we had the right to do so. [It] did not happen," Shaikh Abdullah said. "All the other countries did not mention anything about hosting the central bank till last year. For the first four years it was only the UAE which was a candidate to host the bank - so this is where we are today."

Al Suwaidi added that the location of the proposed bank was not the only issue that led to the UAE pulling out of the Gulf Currency Union, since there were some other reservations raised by the UAE on the common currency project, but these were overlooked.