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UAE to Rejoin Monetary Union, if Terms Change

(Reuters)
Filed on May 23, 2009

VILNIUS — The United Arab Emirates foreign minister said on Friday the Gulf state would consider rejoining a Gulf monetary union if terms change and its neighbours agree to allow a joint Central Bank to be based in the country.

Foreign Minister Shaikh Abdullah bin Zayed Al Nahayan left the door open on Thursday for the UAE to rejoin the euro zone-style single currency, a day after pulling out, but did not elaborate on what conditions would have to be met.

Speaking to Reuters during a visit to Lithuania on Friday, Shaikh Abdullah said: “If the terms are different, we will look positively to that. At the moment the terms are unacceptable for the UAE, and that’s why we decided not to join.”

The second-largest Arab economy broke ranks with Saudi Arabia and three other Gulf states this week by withdrawing from the long-troubled plan in protest of a May 5 decision to base the joint Central Bank in the Saudi capital, Riyadh.

Asked what terms would have to change, Shaikh Abdullah said that up until last year, only the UAE had been a contender to host the joint body that would be responsible for managing and issuing Gulf currency notes and coins.

In September 2006, the UAE Central Bank governor had said capital city Abu Dhabi was chosen by GCC states as the Central Bank headquarters, comments later retracted by GCC policymakers.

Prior to the location decision this month by Gulf heads of state, Saudi Arabia, Qatar and Bahrain also said they wanted to host the bank — and Saudi Arabia, the largest and most-influential country in the region, was chosen in the end.

“When I say the terms, the UAE was the first country supposed to host the Central Bank, and we believe we had the right to do so. (It) did not happen,” Shaikh Abdullah said.

“All the other countries did not mention anything about hosting the Central Bank till last year. For the first four years it was only the UAE which was a candidate to host the bank … So this is where we are today.”

When Oman pulled out of monetary union in 2006, it did not describe why that decision was taken.


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