Is EMU a viable model for monetary integration in the Arabian Gulf?

Abstract

The Gulf Cooperation Council (GCC) intends to form a monetary union using the EMU process as a blueprint, including a set of Maastricht‐style convergence criteria. Yet, as the 2010 deadline approaches, few of the necessary institutional preparations have been made. This paper argues that while GCC leaders considered the economic case (on the whole beneficial) they neglected to fully consider the political implications of monetary union. It concludes that devolving decision‐making powers to pan‐GCC institutions, the need for greater levels of budgetary transparency and fiscal discipline may presently be considered too costly for the region’s ruling elites.

Keywords:

• monetary union
• economic integration
• economic policy objectives
• Gulf Cooperation Council states
• comparative studies

JEL Classification:

• E52
• F15
• E61
• O53
• o57

Notes