(Reuters) – Gulf Arab oil producers are struggling to get a monetary union plan, including the launch of a single currency, back on track as the massive project with a self-imposed 2010 deadline falls increasingly out of reach.
Following is a timeline of selected events leading up to the creation of a monetary union for the world’s biggest oil-exporting region, where most states peg their currencies to the dollar and face record- or near-record inflation.
1982 – Gulf states ratify an agreement “to coordinate their financial, monetary and banking policies … including an endeavour to establish a joint currency”.
Dec. 2001 – Gulf Arab rulers agree to draw up legislation for monetary union by 2005 and launch a single currency by 2010. The oil producers agree to peg their currencies to the dollar until achieving monetary union.
Jan. 2002 – Gulf states agree to reduce the unified customs tariffs to 5 percent on all imported goods by Jan. 1, 2003 as part of GCC customs union.
Oct. 2002 – Gulf states say they are seeking advice from the European Central Bank on their monetary union programme.
Dec. 2002 – Gulf rulers agree to complete a common market by the end of 2007.
Jan 2003 – Kuwait re-pegs its dinar to the dollar from a basket of currencies in preparation for monetary union.
April 2003 – The UAE finance minister says a single Gulf currency is likely in 2007, three years ahead of schedule.
Aug. 2004 – Gulf states should agree on the name of the single currency, its specifications and the mechanisms to put it into circulation by 2007, says GCC General Secretariat.
Aug. 2004 – The GCC Supreme Council is studying possibility of setting up a common central bank by mid-2006, the General Secretariat says.
May 2005 – Gulf states have made only “modest progress” toward the single currency, says Kuwait’s central bank governor. Feb. 2006 – Gulf states are expected to agree on a joint monetary council by the end of the year to help harmonise monetary and fiscal policies, says GCC General Secretariat.
May 2006 – Kuwait allows dinar to rise by 1 percent.
Sept. 2006 – UAE central bank governor says single currency should be free-floating by 2015.
Nov. 2006 – Saudi Arabia’s central bank governor said there were “reservations” about the 2010 timetable but that it was too early to talk about modifying it.
Dec. 2006 – Oman decides not to join monetary union by 2010 deadline, leaves door open for joining later. April 2007 – Saudi central bank governor calls 2010 deadline “very ambitious”.
May 2007 – Kuwait drops dollar peg, dealing another blow to monetary union.
Sept. 2007 – Gulf Arab central bankers agree to develop separate policies to tackle soaring inflation after failing to inject momentum into a plan for monetary union. The 2010 deadline would be “difficult” to meet, Saudi central bank governor says.
Dec. 2007 – Gulf Arab rulers try to close ranks on currency policy and remained committed to a 2010 target date for monetary union, urging states to get it back on track.
Feb. 2008 – Oman’s central bank governor says Oman has decided not to join monetary union at all.
April 2008 – Gulf central bankers agree on fresh impetus for efforts to create a single currency and resist pressure to revalue their currencies unilaterally to offset soaring inflation.
June 2008 – Gulf central bankers finalise the draft monetary union agreement and plans to set up a monetary council that will form the first leg of a common central bank.
They remain committed to the 2010 deadline, but Qatar’s central bank governor says deadline does not refer to the currency.