Dubai’s woes make it unlikely the UAE will rejoin the plan for Gulf monetary union any time soon.
The Gulf co-operation council – Saudi Arabia, Kuwait, Qatar and Bahrain, the UAE and Oman – will meet over the next three days in Kuwait, where a single regional currency is likely to be discussed. The UAE pulled out of the plan in May in protest at the Saudi siting of the proposed joint central bank. Kuwait, about to take over presidency of the GCC, has said the location would not be reviewed.
Oman pulled out of the plan in 2006, saying it would not be ready by 2010. The four remaining members have recently admitted they will not meet the 2010 deadline, either.
Financial problems in Dubai might make a regional bloc more attractive for the UAE in the long-term. But for now the UAE, which accounts for a quarter of regional GDP, would be joining from a position of weakness. Analysts consider such a move at this meeting unlikely. Striking a power balance in the GCC remains a challenge, with smaller economies resisting Saudi dominance.