Single currency deadline could be extended to 2015

Doha: The overly ambitious deadline of 2010 to issue a unified Gulf currency is expected to be extended by five more years at today's Gulf Cooperation Council (GCC) summit in Doha, according to officials and analysts.

But there will at least be an agreement on the implementation of the GCC Common Market in one month, they said. However, the controversial issue of the declining US dollar and its impact on GCC econ-omies is expected to dominate the leaders' meeting today.

The leaders are under pressure to either de-link their national currencies from the dollar - which has lost significant ground to the euro and other currencies over the past few months - or revalue the Gulf currencies to minimise the impact.

Oil producing Gulf states sell their crude in dollars but Europe continues to be their major trading partner.

"The best thing to do is to link the GCC currencies to a two-currency basket, preferably the US dollar and the euro- fifty per cent equally," UAE-based economist Dr Mohammad Al Assoumi told Gulf News.

He said there is a proposal on the table to do that at the summit.

Differences

But Qatari Minister of Finance Yousuf Kamal told reporters, before a meeting of GCC finance ministers, that the dollar issue was "not on the agenda", underlining the differences between the six member states with regard to the controversial currency peg.

A diplomat told Gulf News there was a difference among the delegates on how to go about protecting local economies from the continuous fall of the dollar.

The UAE and Qatar would like to see their currencies pegged to a basket of currencies, but the Saudis, Omanis and Bahrainis want to stick to the US dollar, another source said.

Kuwait has already de-linked its dinar from the greenback in favour of an international basket.

"There is another option," said Al Assoumi. "They can revalue the local currencies gradually, let's say by 15 to 20 per cent over a period of a year or even two years".

That would prevent any negative sudden impact, he said.

"It remains, however, a political decision that has to be taken by the leaders themselves," he added.

The view was also shared by other officials in Doha who referred questions on this subject to the meeting of the foreign ministers, which started last night to finalise the summit's agenda.

Al Assoumi, however, noted that there was an agreement on the implementation of the Gulf Common Market in January, paving the way to introduce the long anticipated unified currency.

Delay

The common market was originally set to be implemented in January this year, but was delayed for one year because of a few remaining issues, such as the freedom of financial movement between the member states and unifying labour laws.

"These issues can be addressed later when the pact goes into effect," Al Assoumi said.

The common market is important step towards the issue of a single Gulf currency. The currency was originally set to be introduced in 2010 but the plan ran into trouble when Oman said earlier this year it needed more time.

The finance ministers met in Doha on Sunday to finalise "the economic agenda" of the summit, including the single currency point.

The leaders are expected on Tuesday to declare the group's plan to defer the issue to a widely touted 2015 new deadline.

The 28th GCC summit is being held in the shadow of the continuous decline of the US currency and the increasing tension between neighbouring Iran and the United States.

The two issues are expected to dominate the meeting, which will be also attended by Iranian president Mahmoud Ahmadinejad as a guest for the first time.