A Monetary Union in the Gulf countries
Six Gulf countries announced after a meeting in December 2007 in Doha, the creation on 1 January 2008, of a common market that could be followed with a single currency that would reduce their dependency on the dollar. This was supposed to come in existence in 2010. This did not please Uncle Sam. Initiated in 1981, the integration of the 6 countries began with a commitment to economic cooperation. Oman, UAE, Bahrain, Kuwait, Qatar and Saudi Arabia thus form the Gulf Cooperation Council (GCC). A new stage of integration was achieved by these countries in 1983 with the creation of a free trade area. Then in 2003 there was the formation of a customs union, and eventually a common market from January 1, 2008. The last step in this process was after the 22nd GCC summit held in 2001 which was the creation of a monetary union with a common currency. The GCC had aimed to enforce its single currency in circulation in 2010, but this project was plagued by runaway inflation and a weak dollar. In addition, Oman declared that he was longer interested in this project, and the UAE has recently withdrawn because of disagreements over the location of the central bank.
Currently, the process of monetary integration is underway. Countries have anchored their currencies, including the US dollar since 2002, and meet the criteria of economic rapprochement since 2005. Thus, it is interesting to wonder to what extent the monetary union of the Gulf countries may be relevant. To know this, we must first understand the monetary union of countries around the concept of optimal areas. Subsequently, we will judge the relevance of this process by analyzing its costs and benefits. Finally, we will see what perspectives can be envisaged for this promising monetary cooperation.