Browse
related articles
Greece is not an Arabian Gulf country, but the current EU debt crisis includes an element of irony as it was mainly the media in Europe which pointed to Dubai's debt just six months ago. When the government-related group Dubai World announced that it would postpone payments of parts of its $23bn debt at the end of November 2009, the media in the UK and Germany were the first to say that Dubai was a "failed vision running out of cash". Since April 2010, the self-same media is now busy dealing with failed financing programs in its own backyard.
On April 27, Standard and Poor's decreased Greece government bonds to "junk status". With a government deficit of 9.3% of its GDP 2010, and a gross debt of EUR300bn - of which foreign holders have a 75% share - the Mediterranean state became the trouble-child of the union. Only a EUR120bn rescue package for Greece and additional EUR750bn "protection shield" launched by the IMF and the EU could save the Euro currency from collapsing and the Eurozone from braking apart. The strict savings programs that Athens was forced to implement also triggered country-wide riots.
Fundamental differences
Today there are 16 European states using the Euro as their official currency. The Baltic state of Estonia aims to adopt the Euro in 2011 as member number 17. The continued push to enlarge the EU and the Eurozone is one fundamental difference compared to the GCC's aims. The six GCC member states of Saudi Arabia, Kuwait, Bahrain, Qatar, the UAE and Oman have been the same since the GCC foundation in 1981. Only Yemen announced in 2001 at the GCC summit in Muscat, Oman, its intention to join the union. Although Gulf states as well, Iraq and Iran are not members.
Although both economic blocks, the EU-27 and the GCC, share the goals for integration, economic prosperity and monetary stability, their differences are fundamental. While the prelude of the European Union were two world wars, the Gulf countries only faced border conflicts and minor internal wars (such as Oman in 1971, when Sultan Qaboos successfully halted a rebel uprising in the south). And while Europe is composed of nations with severe differences in relation to languages and economic power, Arabic is spoken in all GCC states, and Islam is the state religion.
Lack of clear strategy
Athens, as a capital of a comparatively lower income economy, benefits from the common European market, as all GCC states benefit from their union. The six member states of the GCC are also striving for a common currency. Since 2008, however, when the GCC single market was conceived, the way to an Arabian-style Euro as a means of payments seems as uncertain as ever.
The idea to form a common currency (dubbed the Khaleeji) emerged in the 1990s. In December 2001 the GCC countries agreed to endorse the new Economic Agreement, including a GCC Common Currency.
Gérard Al-Fil, Financial Journalist
