More than one challenger to U.S. Hegemony
When most of us think of challenges to U.S. power in the world, most think of the EU or China. There seems to be no mention of the plans to unify the Gulf states. As stated here:
"The Gulf monarchies, whose combined GDP stood at 385.4 billion dollars in 2003 and is expected to reach 421.5 billion dollars this year, plan to establish a monetary union in 2005, a common market in 2007 and a single currency by the start of 2010."
...this is the first I've heard of it at least. How does this effect U.S. plans in Iraq. Obviously Iraq is not a Gulf monarchy, but would the group expand to include other Gulf states? This also may put to rest the fears that OPEC may move to the Euro for valuing oil. It seems more likely now that OPEC will start to divest it's dollar holdings into multiple currencies over the next 5 years. Still, the value of oil would no longer be pegged to the dollar.
posted by Oberon at 2:20 PM
1 Comments:
I get the first comment on the blog. I feel so honored.
Interesting. While a GDP of around $400B is only about 3% of the size of the EU's combined GDP (that may included GB - I don't recall), it's still not insiginficant. And indeed, I'd only expect that number to climb with increasing oil revenues. The question is whether or not the Gulf states can become something beyond the supplier of mineral goods. Turkey might be a good model, as they're quickly moving into a productor of goods ranging from small electronics to agricultural equipment. I think it comes down to finding a way for those states to put all their Western-educated people to work.
On the issue of impact on oil prices, they may very well develop their own currency, but I can't imagine that they'd do anything but peg its value to the Euro. Effectively, oil prices already reflect that - the OPEC target for per-barrel oil prices now floats somewhere in the mid-/high-$40 range (as evidenced by their production cuts once it hit $42), where as it was around $28-30 not even two years ago.
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