A single Pan-Arab market currency is essential for a prosperous future

Rami Rayess

Published: Updated:

The countries of MENA need to collaborate to launch a single currency like the Euro. Allowing the region to exploit resources, coordinate policies, and accelerate economic growth, it will cut political tension and conflict.

If the governments of the region fail to do this, as has been the case for decades, there will always be war. Relying on international support will remain a policy of dependency, and Arabs will never compete with other parts of the world.

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With all the resources available to achieve that goal, a political decision to move forward is an indispensable step to allow progress to take place.

Yes, it was on several occasions attempted to set up a single currency. No, it has never managed to.

Established in 1978, The Arab Monetary Fund had the purpose to develop a unified currency: the Arab Dinar. An agreeable political decision from all the stakeholders proved impossible, with Western currencies (especially the US Dollar) dominating international trade transactions, one reason for its failure.

In 2012, the Arab League Council discussed the Union of Arab Exporters launching a unified currency, but no concrete development happened. It disappeared in the Shamal of time.

Speculation about the inability of Arab states to foster economic relations, and follow a path similar to that of the European Union continues to haunt the region.

The Arab League and the European Coal and Steel Community were launched at similar times. The former in 1945, and the latter in 1951.

While Europe has established a currency, opened borders with free movement of people, goods and trade, Arabia can only dream of achieving something similar.

Whether or not Arabs will ever succeed in opening a new page of vast economic collaboration has become even more skeptical with the regional shuffling of cards after the Abraham Accords.

The European model, despite Britain’s withdrawal, remains an example to look up to.

Most importantly, political differences were set to one side.

Each country maintains its own independent foreign and domestic policies, and reaches common ground as issues arise.

Arab economic integration has fallen short of expectations. True, there are structural chasms between Arab economies, with some more advanced than others.

Yet, the same scenario was overcome in Europe. There are existing protocols that can allow a gradual integration, despite structural discrepancies between Arab countries.

The first road map should include launching the necessary political and economic initiatives, followed by installing the necessary institutional mechanisms to meet the goals, and expect gradual results. Addressing variances in the heterogeneous Arab economies would be a top priority too.

Arab economies can complement each another. Labor mobility, for example, would allow Egyptians freely move to Saudi Arabia to fill gaps in sectors and industries, or Jordanians to add to the knowledge economy in Kuwait.

Any attempts to cooperate always flop.

The first Arab Economic Summit convened in Kuwait in 2009. It was followed by three other summits in Sharm el Sheikh in 2011, Riyadh in 2013 and Beirut in 2016. The last was a total failure with a boycott of Arab leaders.

The importance of organizing summits, and ones that can limit discussions to economic issues, is important, but these four achieved little, if anything.

The Gulf Cooperation Council (GCC), is the exception, with all other attempts reaching deadlock and fading away.

As Arabs have been politically divided they have also failed to contemplate the gains achievable from cooperation.

The Maghreb countries, for example, turn to the EU for economic cooperation due to geographical proximity. Some Arab countries prefer to turn to the US, the EU and China rather than their neighboring ailing Arab economies. This is not to undermine the enormous support that the GCC has provided to nations, such as Lebanon, Jordan and Yemen.

Liberalizing interregional Arab trade and services seems a necessary but insufficient condition to foster economic cooperation and integration. At least this was the path of success for the European Union.

Openness cannot be restricted to the removal of trade barriers and reviewing custom regulations. There should instead be an open policy for exchange of services. Communications, information technologies, transport and financial services are but a few to mention. Intra-Arab cooperation in these sectors are lagging behind.

An absence of conviction by Arab decision-makers implies there isn't any form of integration likely.

Integration is capable of accomplishing direct benefits to member states by boosting foreign direct investment in evolving economies, while generating badly needed employment opportunities.

If geographical proximity, common language and culture is not conducive to start economic integration, what is?

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Disclaimer: Views expressed by writers in this section are their own and do not reflect Al Arabiya English's point-of-view.