Absence from a summit meeting of this nature tends to send a diplomatic message. 'I have more important things to do,' or 'I'm not happy about the agenda,' or 'Somebody's upset me.' Since Gulf Monetary Union was a major topic for this conference, and Oman is adamant that it will not join, the absence of His Majesty sent a pointedly discreet signal. Kuwait, which hosted the meeting, had positively asserted that both UAE (which quit last year) and Oman, which announced its decision in 2006, would re-join the fold.
I think I'd side with the leader who felt that discussion of the Swiss government's ban on minarets should be assigned to a minor item under Any Other Business. As it was, the Oman Observer reported that the council was 'overwhelmed' by the decision and classified it as 'discrimination against Islam.' The affair evidently stretched mind and comment.
Understandably, the impact of the global recession, especially events in Dubai, was a talking point, as was the armed infiltration of Yemenis across the Saudi border. The delegates gave full support to both Saudi Arabia and the Yemen government on this issue.
Note that the summit was held at exactly the same time as the Copenhagen summit on climate change. National leaders were converging on Copenhagen as the GCC summit was closing.
I had wondered if there would be an official delegation from Oman in Copenhagen, and eventually discovered that His Majesty is being represented by Sayyid Hamoud bin Faisal al Busaidy, Minister of Environment and Climate Affairs, accompanied by Sayyid Badr bin Hamad al Busaidy, Secretary General of the Foreign Ministry, Mohammed bin Sakhr al Amri, Under-Secretary of Transport and Communications Ministry for Civil Aviation and other government officials.
The official list of confirmed delegates lists just one businessman from the UAE and no other Gulf national. Climate change has obviously not been recognised in the Gulf as an opportunity to develop business.
Saudi Arabia and Kuwait have been notable opponents to any climate change agreement, arguing that cuts in energy and thus oil consumption, would cause billions of dollars of losses to the Gulf economies. Mohammed al-Sabban Senior economic adviser, Saudi Arabia, has been earmarked as 'Copenhagen's most likely villain.' Commentators counter-argue that Saudi has great wealth to fall back on while poorer countries in the Group of 77 have slammed Saudi Arabia for undermining key issues in the climate change talks that affect them.
So full marks to Oman's Haidthan (should that be Haitham?) Al-Yakoubi, 23, who is an official observer at the summit, thanks to British Council sponsorship. He does not argue against using oil but wants his government to invest in better technology to reduce emissions. Business opportunity there, surely.
He also wants the government to develop solar power, because he recognises that oil will run out some day. He views the Copenhagen summit as an opportunity to learn how to increase awareness of the issues back home.
GCC leaders were not entirely oblivious to climate change issues. They argued for the peaceful implementation of nuclear energy under IAEA rules. Both UAE and Oman have signed agreements to implement nuclear energy.
Agriculture, livestock and fish resources, global warming and climate change, people with special needs - all have been referred to ministerial talks as a basis for discussion at the 31st GCC summit next year.
Postscript 18th December: Are you fascinated by conspiracy theories? Read this blog at today's (18th Dec) Daily Telegraph, which posits a connection between the Sultanate of Oman, Royal Dutch Shell and the Climate Research Unit (CRU) at the University of East Anglia. Remember? Saudi Arabia claimed that the theory of climate change had been brought into disrepute by the allegation of 'fixed' data at the CRU.
Indeed, the Sultanate of Oman is named as a sponsor of the CRU. I'm still trying to make sense of it all.
Arrangements for the summit were well in train before the terrorist attacks in Mumbai. Mumbai is uncomfortably close to the Gulf. A story appeared in The Hindu Business Line of 7th December, of an Omani youth being arrested in Goa. Apparently, he had been browsing al-Qaeda content in an Internet cafe. Not speaking English, he was alleged to have been browsing Arabic language sites. It transpired that his visit visa had run out.
The Israeli assault on Gaza overshadowed the conference. An AFP report suggested that Saudi Arabia had rejected a follow-up meeting of Gulf presidents to discuss the situation in Qatar next week, as merely a "summit of statements" and therefore a futile gesture.
It's not surprising that the AGCC leaders would not be tempted to be over-eloquent in condemning Israeli action and supporting Hamas. Hamas grew out of the Palestinian wing of the Muslim Brotherhood in the late 1960s. The Muslim Brotherhood is a banned organisation throughout the Arab world, notably in Egypt, where its members have been branded as terrorists. Ironically, "much of Hamas's funding came from Palestinian expatriates and private donors in Saudi Arabia and other oil-rich Persian Gulf states."
Although the Muslim Brotherhood, which is committed to Islamise societies and introduce sharia law, professes non-violence, al-Qaeda has "historical and ideological affiliations with the Egyptian Brotherhood."
Gulf Monetary Union
Monetary union of the Gulf currencies was the projected theme of this year's conference. Agreement was reached. All the technical work had been done before the leaders met. So news of the new currency's name, the 'khaliji', and of the date by which monetary union would be enacted, December 2009, were in the public sphere before being ratified by the AGCC leaders.
A Gulf monetary union and common currency would enable the Gulf economies to become independent of global economic pressure caused by being pegged to a fluctuating US dollar, on which the price of oil is based, or so the theory goes.
While correcting a broken link in this article, I came across another story which chimed with my own perceptions:
The years of difficulties, delays and doublespeak suggest that there is more chance of Bahrain winning the football World Cup in 2010, than there is of you or I being asked to settle a bill in khaleeji, or whatever Gulf leaders elect to name the currency.Single currency? Meh!. If that link gives up working, look for the title on Arabian Business dated 17th December 2008.
Oman withdrew from plans to join the monetary union in 2006, saying that its economy was not ready. Not only that, Minister for National Economy, Ahmed bin Abdul Nabi Makki, again confirmed this week the Sultanate's view that the region itself was not ready for monetary union.
HM Sultan Qaboos bin Said al-Said's opening remarks to the conference, calling for a mechanism to stablise oil prices, emphasises that Oman believes efforts would be better devoted to broad international discussion of economic conditions.
Only the monetary union is to be launched in January 2010. Decisions on the single currency and the location of the Gulf Central Bank require further discussion.
Both Oman and Kuwait cut their interest rates in December, following Federal Reserve rates, even though interest rate cuts can worsen inflation. Oman's inflation rate did fall to 13.4% in September 2008, just 0.3% less compared with the inflation rate in August.
The Muscat Declaration
The summit concluded with another Muscat Declaration.
"the Sultanate praises the decision of the AGCC ministers responsible for environmental affairs, in granting a periodical award in the name of the Arab Gulf Cooperation Council for outstanding environmental activities. The award aims to raise the level of environmental understanding and awareness among the peoples of the region, and to encourage individuals and institutions to research, create, and innovate in order to devise suitable solutions for contemporary environmental issues."His Majesty Sultan Qaboos bin Said al Said is going to pay for this award.
More details emerged in stories published by the Times of Oman. Statements were agreed regarding
- increasing piracy in the Gulf of Aden and the Red Sea
- membership of the Yemeni Republic at the AGCC Standardisation Authority and Gulf Organisation for Industrial Consultancy, the AGCC Auditing Authority and Gulf Radio and TV
- Withdrawal by Israel to pre-1967 borders
- the UAE's right to islands in the Gulf currently occupied by Iran
- tricky one this - importance of abiding by international principles and resolving dispute with Iran by diplomatic means
- keeping the region free from nuclear weapons whilst reserving the right to use nuclear energy for peaceful purposes
- the necessity of maintaining the sovereignty, territorial unity (note) and independence of Iraq.
A communiqué issued at the end of the two-day summit strongly condemned the “painful events in Gaza and the destruction inflicted by the brutal Israeli military without any human consideration or legitimacy”.In addition, the summit agreed to the establishment of a "basic statute of the AGCC anti-drugs criminal information centre due to be established in Qatar" and congratulated Bahrain on the security measures it had taken during recent disturbances. In general, the attendees confirmed that it was essential to share information to combat terrorism. Full details in the Times of Oman.
I hope the journalists had a great time while staying at the Muscat Intercontinental Hotel where they were treated to an exhibition of books published in the Gulf countries. Most of the books were apparently in Arabic.
All in all, as one has learned to expect from AGCC summits, nothing emerged which was likely to be beyond polite interest. Officially that is.
Free Trade Agreements
The Oman-USA FTA came into force on 1st January 2009, which many believe will mean an influx of American companies bidding for work, protected by the FTA rules. Apparently, US exports will become less expensive in Oman. Does that mean that the streets of Muscat will be flooded with American rather than Japanese or German cars? It's naughty I know, but I can't help imagine Muscat becoming a haven for all those cars and SUVs that the distressed American car industry hasn't been able to sell back home.
Labour agreements signed between India and Oman in November were presumably a precursor to full implementation on the labour rules' side.
Not such good news for the Gulf's trade agreement with the European Union. "General-secretary of the GCC, Abdul Rahman Al Attiyah, announced suspension of negotiations [in mid-December 2008] until further notice. He stipulated the EU signing a draft accord as a condition for resumption of talks." Bur a free trade agreement with Singapore was agreed at the summit.
I can't discover any official announcement in the Omani English language press. Reading the official report of the summit in the Times of Oman of 11th December, one would never know that Oman's withdrawal from Gulf currency union in 2010 had actually been mentioned at the summit. Of course, NOT mentioning something can be construed as a sign of displeasure. 'We don't like it, so we won't acknowledge that it exists!' But that could be unfair. Any statement that could be construed as criticism of one's peers could also be considered negative and unworthy.
In fact, when I read the initial reports which mentioned sovereignty as an issue , I was rather reminded of Britain's refusal to join the Euro. There are even five economic tests which the Gulf countries can use to assess whether they are ready to join a currency union, including capping budget deficits at 3 percent of gross domestic product, public debt at 60 percent of GDP, and inflation at the GCC average plus 2 percent. Interest rates are to be no higher than the average of the lowest three states plus 2 percent and countries must have foreign exchange reserves to cover 4-6 months of imports. Khaleej Times quoting Reuters.
The Khaleej Times also reported that a Gulf official had apparently said, on condition of anonymity, that the decision was positive in that the Sultanate had no objection to the other AGCC countries going ahead with currency union, and would still like to attend the relevant meetings without voting rights.
The Chinese news agency pointed out that the AGCC customs union had been put back at the previous year's summit, from 2005 to the end of 2007. National sovereignty therefore seems to be a strong factor in these decisions.
What's involved in the Gulf currency union? Currencies are pegged to the declining dollar. Presumably a shift to another currency such as the Euro, which the Financial Times reports has now overtaken the US dollar in the international bond market , would mean that the value of 'cash in hand' e.g. income in US dollars from the sale of oil and gas, would become less, since the local currency would effectively be revalued.
Gulf News of 12th December claimed that
'a report from HSBC Global Research says [Oman] may end up on the margins of regional development, especially since foreign investors will find it a less attractive place to do business.And from Gulf News of 11th December
While Oman's departure may not leave huge economic ripples behind, it still is a blow to the unified front the GCC has been trying to build.'
'"If we are talking about 2010 being pushed back, it increases the likelihood that there could be a revaluation," said Simon Williams, an economist at HSBC in Dubai. "There are other arguments against revaluation in central bank governors' minds, but if they decide to push back 2010, then that argument falls away."Again on the 12th December, Gulf News reported an affirmation by Ahmad Bin Abdulnabi Macki, Oman's Minister of National Economy, that Oman would not be joining the currency union, when he was pressed for a statement on the sidelines of the signing of the Barka II Independent Power and Water Project and privatisation of Rusayl Power Company.
Explanations began to emerge in a Reuters report re-published by the Khaleej Times on 13th December. The undersecretary for economic affairs, Abdul Malik bin Abdullah al-Hinai, said
“No doubt there are benefits for Oman from monetary union, but the question is whether it is realistic or not. Prerequisites to a common currency such as a customs union and a common market have still not been completed, making the 2010 deadline unfeasible. ”He also said that because Oman had started development later than the other Gulf countries, it still needed to spend more on infrastructure, which would presumably make it difficult to meet targets for capping budget deficits and public debt.