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Pan-Arab currency unlikely by ‘20
Opinion: The Council of Arab Economic Unity says its 18 members will have a common currency within 10 years. Is that really feasible, given that even the smaller GCC monetary union is still up in the air?
February 8, 2010 7:44 by Ben Flanagan
One of the less corny maxims attributed to motivational speaker William Arthur Ward centers on the importance of realism in everyday life. “The pessimist complains about the wind; the optimist expects it to change; the realist adjusts the sails,” the American is quoted as saying.
Dr. Ahmad Juwaili, secretary general of the Council of Arab Economic Unity, could do with taking this on board when making overly optimistic predictions about monetary union in the Arab world.
In an article in today’s Asharq Al-Awsat newspaper (in Arabic here), Juwaili is reported as saying that a single Arab currency will be formed within ten years, following the successful establishment of an Arab Central Bank.
Juwaili does not mean the delayed, highly problematic GCC monetary union. He means a single currency for the 18 member countries of the Council of Arab Economic Unity. These include the six GCC states, and several other countries including Yemen, Egypt, Iraq, Lebanon, Libya, Sudan and Syria.
If, as Ward said, optimism is expecting the wind to change, then Juwaili’s claim would resemble a hurricane doing a U-turn.
For while monetary union has been the dream of the Arab world for more than half a century – and, certainly in political and cultural terms, has always made a lot of sense – the possibility of it happening by 2020 is highly unlikely.
Take the example of the smaller GCC monetary union. The Gulf states first ratified an agreement to “endeavour to establish a joint currency” way back in 1982. But the proposed 2010 deadline for the GCC common currency was abandoned last year, following the UAE’s withdrawal from the project, in protest at the decision to house the joint monetary council in Riyadh. Oman had already withdrawn, and has no plans to rejoin; a recent Reuters poll found that the remaining four countries are unlikely to form a monetary union before 2015 – and even that may be a little optimistic.
If a union of the hyper-rich GCC countries can prove so problematic, than it is difficult to see how a wider pan-Arab monetary union could happen any time soon.
Consider the European single currency, which became an official objective of the EU in 1969 – but was only adopted in 1999. Some European countries, such as the UK, have still not adopted the Euro.
The eurozone is made up of rough equals, and it took nearly half a decade for a single currency to emerge there. And so a union between countries as economically disparate as Saudi Arabia, Sudan and Egypt seems destined to failure in the short- and medium-term.
Still, Juwaili’s unrealistic deadline aside, a pan-Arab currency is certainly a worthy aim. Perhaps the successful formation of a GCC single currency could help pave the way – or rather, adjust the sails – for a wider economic union in the Arab world.