'Gulf countries now have historic chance to accept unified currency'

Gulf states have a historic opportunity at the moment to approve their unified currency and play a bigger role in the world monetary system, according to a senior French financial official.

Jean-Pierre Jouyet, Head of the Financial Regulatory Authority (AMF) and former minister of state for European affairs, said the unified currency is a political rather than a financial decision in the first place.

Jouyet said financial difference among Gulf countries, centred on public debt and deficit, can be overcome. He was speaking at a forum in Abu Dhabi on the experience of the European monetary union, organised by the Emirates Centre for Strategic Studies and Research.

"Reaching a reasonable level of public debt and financial deficit in Gulf states is a very possible thing, and we in the European Union overcame more difficult things. And it is possible to help states that lack the big financial ability. There should be common understanding among Gulf states to end any differences."

Jouyet said the euro has come out strong from the global financial crisis, which was not expected.

He said the euro saved many countries including the Balkan ones from financial collapse. "Also we have noticed an increase in the influence of the euro in the monetary reserves in world markets and the Asian ones in particular. We also notice that many countries now boost their euro reserves, which leads to an increase in the euro rate of exchange as we have seen lately."

Jouyet said many financial markets are introducing financial products in euro, and undoubtedly this is positive for the euro, "but it is not good for our exports and competitive position in the world.

"We hope the euro will in the near future reach a moderate level and not to largely rise in a way that affects inflation in Europe.

"Most certainly, when we look at the euro after 14 months of the global financial crisis, we can confirm the euro has not been damaged as the dollar has. And undoubtedly, without the euro Europe would not have lived a stable situation."

Jouyet said Europe needs a joint policy to get out of the global crisis, especially at the level of public debt and deficit. Europe will manage to recover and it has to curb the public debt and deficit in all euro zone countries.

"No doubt we have differences in public debt and deficit among countries of the euro zone, but we will manage to overcome them, and the deficit will end in 2011. This target is difficult to meet because the countries have small incomes. Also taxes on citizens and companies cannot be increased. However, the euro zone countries will overcome all this with big support from their strong currency."

He said the EU and Turkey have agreed on a new track of negotiations and there is progress, but "I believe the Turkish people might in the end refuse to join Europe".

Jouyet said France is keen to enter the UAE market with force, especially that of Abu Dhabi. Soon French investors will be brought to Abu Dhabi. "We are also ready to host UAE firms, and we are opened to sovereign funds and have a strong desire to motivate Islamic banking in France and to benefit from UAEs experience."