Honest Money

Introducing the Gulf Single Currency immediately,
without waiting for the Gulf Central Bank,
and notwithstanding the legitimate fear of the International Monetary Fraud (IMF) to be relegated to the dustbin of history,
will display in the open that euro is not endangered
and will further elucidate the idea of a “single entity”
which was launched last week by the Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz of Saudi Arabia,
at the opening of the Annual Meeting of the Gulf Co-operation Council (GCC) in Riyadh.

In September 2009, Gulf finance ministers said that a single central bank for the Gulf could make the region a formidable international force. With the Gulf’s immense oil wealth backing up the bank, the region could be home to one of the world’s largest central banks in terms of assets, analysts said. (1)

Now we are told that last week’s Gulf Co-operation Council (GCC) Summit in Riyadh failed to give the green light for immediately
pooling the GCC gold and oil reserves,
making this pool the reserves of the GCC Single Currency,
and periodically marking these reserves to market (-price)
BECAUSE
calls for a unified currency are not popular nowadays partly reflecting Eurozone’s experience. (2)

It is true that the guv’mints established on the eurozone are experiencing problems.
The euro is however not experiencing problems on foreign-exchange markets.

The problems faced by these eurozone guv’mints are budgetary problems.

The participation by EU member states in the euro was made dependent upon participation in European Economic and Monetary Union (EMU). This meant that a European Union country could only adopt the euro as legal tender if it met the criteria set by the Maastricht treaty for EMU, one of these criteria being a budget deficit under a certain limit.

The Gulf’s immense oil wealth means that budget deficits are inexistent in the Gulf.
These countries have fiscal surpluses with which they can stimulate the economy. (3)

Enter the International Monetary Fraud (IMF)

Whereas before 15 August 1971, when USA president Richard Nixon broke the Bretton Woods system, the USA dollar was a gold derivative, current IMF rules (article IV, section 2, (b), of the IMF Articles of Agreement) prohibit members from linking their currencies to gold.
Since that date, the IMF has no more reason of existence.

If the IMF continues to exist, this is in order to support the bankrupt dollar regime, thereby making of gold a dollar derivative.

Of course, on 08 December 2011, The National newspaper in Abu Dhabi reported that the IMF is against the Gulf currency bid, (4)

HOWEVER,

In an explicit reference to the gold trail (5)

- Whoever stands still will end up at will end up at the back of the caravan [GOLD] trail and will be lost. (6) –

the Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz of Saudi Arabia,
called yesterday, Monday, at the opening of the Annual Meeting of the Gulf Co-operation Council (GCC) in Riyadh for

“moving from a phase of co-operation to a phase of union within a single entity”. (7)

On 22 December 2011, ArabNews.com quoted Sadaka Fadel, professor of political science and Shoura Council member, as saying that there is a huge difference between “unity” and a “single entity”. (8)

The world awaits further elucidation of the idea of a “single entity” in March 2012 as the present situation is a trifle paradoxical. Despite great strides since its inception, the GCC’s economic integration is still a work in progress. In other models such as the EU, a higher degree of economic harmonisation preceded political unification. The Riyadh declaration may, therefore, seem somewhat premature to outside observers. Viewed in a political perspective, however, the project is a timely response to a fast changing strategic landscape.
says Tanvir Ahmad Khan, former ambassador and foreign secretary of Pakistan, this Monday morning in Gulf News.. (9)

If this call by Custodian of the Two Holy Mosques King Abdullah is a far-sighted move, as Shoura Council described it yesterday Sunday (10),

nothing prevents the the GCC to immediately

- pool the GCC gold and oil reserves,
- make this pool the reserves of the GCC Single Currency.
- and periodically mark these reserves to market (-price).

Central bank? – we’ll see later.

Ivo Cerckel
honestmoney@maktoob.com

NOTES

(1)
Gulf dinar to be backed by gold hiding in oil
Posted by Ivo Cerckel on September 9th, 2009
http://bphouse.com/honest_money/2009/09/09/gulf-dinar-to-be-backed-by-gold-hiding-in-oil/

(2)
Major breakthrough at Riyadh summit
The 32nd summit of GCC held in the Saudi capital city of Riyadh has made notable breakthroughs at least on two economic integration
Dr Jasim Ali, Special to Gulf NewsPublished: 00:00 December 25, 2011
http://gulfnews.com/business/opinion/major-breakthrough-at-riyadh-summit-1.956404
SMIP
Possible reasons for this include experience of delayed implementation of the customs union on the one hand and absence of support from all members to the proposal. Only Saudi Arabia, Qatar, Kuwait and Bahrain are parties to the move.
The final goals include unifying monetary and fiscal policies including introduction of a SINGLE CURRENCY for all member countries.
Unified currency
Nevertheless, calls for a UNIFIED CURRENCY are not popular nowadays partly reflecting Eurozone’s experience. Still, judged by the main theme of the 32nd summit, chances are the GCC grouping turning from the status of cooperation to that of union at least on the political front. [capitalisation mine]

(3)
Gulf Arab economies to slow in 2012, analysts say
By Reuters
Thursday, 22 December 2011 8:15 AM
http://www.arabianbusiness.com/gulf-arab-economies-slow-in-2012-analysts-say-436443.html
SNIPS
Economic growth is likely to slow in most of the Gulf’s wealthy oil exporters next year but governments will remain able to spend to counter the impact of any global slump, a Reuters poll of analysts showed on Wednesday.
+
In contrast to much of the rest of the world, however, the Gulf states still have ample fiscal reserves which they can use to stimulate their economies. They ramped up government spending early this year to protect social stability during the Arab Spring uprisings in the Middle East and North Africa, and are now expected to keep spending high to maintain growth.

(4)
IMF against Gulf currency bid
http://www.thenational.ae/business/economy/imf-against-gulf-currency-bid
Dec 8, 2011

(5)
The Gold Trail: The Message of an Evolving Market
http://www.usagold.com/goldtrail/archives/goldtrailone.html

(6)
UPDATE 1-Saudi says its security targeted, urges Gulf unity
Mon Dec 19, 2011 8:00pm GMT
http://af.reuters.com/article/energyOilNews/idAFL6E7NJ48520111219
SNIP
“Whoever does that will end up at the back of the caravan trail and will be lost… That is something we will not accept for the sake of our countries, our people, our stability and our security. That is why I ask of you today to move beyond the stage of cooperation and into the stage of unity in a single entity,” he added.

(7)
Saudi king calls for Gulf union
AFP, Reuters
19 December 2011
http://www.khaleejtimes.com/DisplayArticle09.asp?xfile=data/middleeast/2011/December/middleeast_December527.xml§ion=middleeast
SNIP
RIYADH – The Custodian of the Two Holy Mosques, King Abdullah bin Abdulaziz of Saudi Arabia, called for the formation of a Gulf union in response to growing threats, as rulers of the Arab GCC met on Monday.
“I ask today that we move from a phase of cooperation to a phase of union within a single entity,” said the Saudi king, addressing his counterparts at the opening of the annual Gulf Cooperation Council summit in Riyadh.
He did not elaborate on what form such a union might take, or any proposed steps to create it.

(8)
GCC confederation ideal choice: Political analyst
byy WALAA HAWARI | ARAB NEWS
Published: Dec 22, 2011 02:01 Updated: Dec 22, 2011 02:01
http://arabnews.com/saudiarabia/article551710.ece
SNIP
RIYADH: Following Custodian of the Two Holy Mosques King Abdullah’s call for the GCC to transform into a single entity, a leading political analyst said fulfilling the king’s vision would depend on certain criteria being met.
Sadaka Fadel, professor of political science and Shoura Council member, said there is a huge difference between “unity” and a “single entity.” “To be able to understand the difference we need to understand what drives countries to form unity and cooperation,” said Fadel.

(9)
GCC union will keep region stable
Political unification preceded by economic integration will create an entity capable of handling strategic issues
By Tanvir Ahmad Khan, Special to Gulf News
Published: 00:00 December 26, 2011
http://gulfnews.com/opinions/columnists/gcc-union-will-keep-region-stable-1.956809

(10)
Call for Gulf union far-sighted: Shoura
By MD RASOOLDEEN | ARAB NEWS
Published: Dec 26, 2011 02:14 Updated: Dec 26, 2011 02:14
http://arabnews.com/saudiarabia/article553618.ece
SNIP
RIYADH: The Shoura Council on Sunday described the call by Custodian of the Two Holy Mosques King Abdullah for a union of Gulf states as a historic step in the progress march of the Gulf Cooperation Council. King Abdullah made the call at the 32nd summit of GCC leaders in Riyadh last week.

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