Dear Delegates,

It is a pleasure to welcome you to the 2016 IIMUN

Conference.
The following pages intend to guide you in the research of
the topics that will be debated at IIMUN 2016 in
committee sessions. Please note this guide only provides
the basis for your investigation. It is your responsibility to
find as much information necessary on the topics and
how they relate to the country you represent. Such
information should help you write your resolution.

The more information and understanding you acquire on

the topic, the more you will be able to influence the
Resolution writing process through debates [formal and
informal caucuses], and the IIMUN experience as a whole.
Please feel free to contact us if and when you face
challenges in your research.

We encourage you to learn all you can about your topic

first and then study your country with regard to the topic.

We look forward to seeing you at the Conference!

GCC (Gulf Cooperation

Council)
The Cooperation Council for the Arab States of the Gulf, originally known as
the Gulf Cooperation Council, is a regional intergovernmental political and economic
union consisting of all Arab states of the Persian Gulf, except for Iraq. Its member states
are Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates.

The GCC was established in Abu Dhabi on 25 May 1981. The unified economic

agreement between the countries of the Gulf Cooperation Council was

signed on 11 November 1981 in Abu Dhabi. These countries are often
referred to as "the GCC states". The purpose of the GCC is to achieve unity
among its members based on their common objectives and their similar political and
cultural identities, which are rooted in Islamic beliefs. Presidency of the council rotates
annually.

The GCC has the following stated objectives:

Formulating similar regulations in various fields such as religion, finance,

trade, customs, tourism, legislation, and administration

Fostering scientific and technical progress in industry, mining,

agriculture, water and animal resources

Establishing scientific research centers

Setting up joint ventures

Unified military (Peninsula Shield Force)

Encouraging cooperation of the private sector

Strengthening ties between their people

Establishing a common currency

Possibility of Monetary Union

Topic Background, Past Experiences & Solutions

In 2014, Bahrain, Kuwait, Qatar and Saudi Arabia took major steps to ensure the
creation of a single currency. Kuwait's finance minister said the four members are
pushing ahead with the monetary union but said some technical points need to be
cleared. "A common market and common central bank would also position the GCC as
one entity that would have great influence on the international financial system" he
added. The implementation of a single currency and the creation of a central bank is
overseen by the Monetary Council.

The endorsement of the Unified Economic Agreement called for the adoption of the US
dollar as a stabilizer of currency by the end of 2002, and included the economic
convergence criteria by the beginning of 2005. Shortly afterwards, in December 2006,
Oman withdrew from the Gulf Monetary Union, and the United Arab Emirates pulled out
in May 2009, following the announcement that Riyadh would host the future Gulf Central
Bank as of 2010. Kuwait abandoned its dinars peg to the US dollar in favor of a basket
of international currencies as a major step toward the implementation of economic
policy convergence and meeting the membership criteria to join the monetary union,
without abandoning the monetary union project.

In the past two decades, GCC countries have made important progress toward
economic and financial integration (See Section II and Appendixes IIII). Formal barriers
to the free movement of national goods and workers have been eliminated, individuals
and corporations of these countries have been granted national treatment for tax
purposes in all GCC countries, and nationals have been recently allowed to invest in
stock markets and real estate of most other member states. In addition, GCC countries
enjoy low inflation, stable nominal bilateral exchange rates, and similar levels of nominal
interest rates, as well as trade and payments systems relatively free of restrictions.
They also share a remarkable degree of cultural and political homogeneity.
The move to a monetary union, combined with appropriate macroeconomic and
structural policies, is likely to be beneficial for GCC countries. This move should, in
particular, improve the efficiency of financial services, lower transaction costs, and
increase transparency in prices of goods and services, and thereby facilitate appropriate
investment decisions. In addition, by requiring sustainable fiscal positions, the union
should promote a better allocation of resources within the GCC area. Nevertheless, the
experience of other monetary unions shows that additional convergence policies are
needed to promote stronger ties in other areas and stimulate growth. Section III and
Appendix IV review the experiences of these other monetary unions and draw lessons
for the GCC countries.

Currency represents an important symbol of national sovereignty, and the need for
political will and resolve is undoubtedly very important for the success and continuity of
a monetary union project. Some economists have gone further to claim that a condition
for the success of a monetary union is for it to be an intermediate step towards reaching
the final goal of political unity. Political commitment will come from the clarity of
decision-makers in relation to the advantages and disadvantages of a monetary union.

Certain conditions should be met before countries can unify their currencies. Most
importantly, they should adopt compatible fiscal policies, determine basic standards for
current and capital spending and put a ceiling on debt and interest rates in the
government budgets. The concerned countries must also agree on an economic
philosophy, including the role of the private sector and issues related to the relationship
between the public and private sectors. Monetary unity in a number of EU countries was
strengthened by a harmony in economic policies in those countries, after all of them
adopted the principles of a market economy and free competition.

Reaping the full benefits of a common currency will require the GCC member states to
deepen their degree of economic integration. Proper economic policies and agreements
in other areas could make important contributions to increasing intraregional trade and
investment and thus make a common currency more desirable. In addition, there is
continuing work in other areas of regional cooperation, including setting the rules for
opening bank branches in the GCC countries, promoting foreign direct investment and
intra-GCC capital flows.

Exchange Rate Policy

The GCC authorities have decided to peg the common currency to the U.S. dollar.
Nevertheless, other options could be considered in light of possible changing trade
patterns over the medium-to-long termwith Europe probably gaining in importance
through negotiations under way for a trade arrangement between the two areasand
emerging changes in the economic structure and exports across GCC countries. These
options could include pegging to a basket of currencies, or, possibly, adopting a more
flexible arrangement. Other decisions about the exchange arrangement must also be
made, such as the pooling of each GCC member's foreign reserves, the rate at which to
irrevocably fix the bilateral rates, and the adoption of common definitionbased on
international standardsof foreign reserves.
Data Standards and Transparency
Assessing the success in meeting convergence criteria and adherence to policy
objectives would require comparable and transparent macroeconomic and financial
statistical information across GCC countries. Therefore, the harmonization of fiscal
concepts and data quality based on internationally accepted standards and methods
should be given high priority before monetary union takes place. For monetary policy
decisions, the common central bank will also have to rely on a set of consistent,
harmonized statistics, because these decisions will be based on the economic situation
in the GCC area as a whole. Furthermore, such statistics are indispensable for financial
market participants, as well as for making appropriate investment decisions.
Institutional Arrangements
A viable monetary union must be accompanied by the creation of a single institution (or
supranational monetary authority) with clear responsibility for formulating and
conducting a centralized monetary policy. Thus, the creation of a common independent

central bank represents the most important institutional change that the GCC countries
may face on the road toward a common currency. This change could be implemented
on a step-by-step basis during the transition period to the introduction of a common
currency. A decentralized approach to organizing central bank responsibilities, like that
of the European Economic and Monetary Union (EMU), seems to be the most
appropriate in a GCC monetary union given political and practical considerations. Under
such an agreement, the common central bank will be responsible for taking monetary
policy decisions, overseeing the payment systems, and coordinating efforts toward
financial integration. The national GCC central banks will implement these decisions,
conduct all or some of the foreign exchange operations, maintain their banking
supervisory functions, and issue the common currency, as well as operate national
payment systems. The contribution of each GCC member country to the capital and
seigniorage distribution of a common central bank will also have to be considered.

References
Alreshan, A. A. a. A., n.d. GCC monetary union. [Online]
Available at: http://www.bis.org/ifc/publ/ifcb32b.pdf
British Middle East Center, n.d. British Middle East Center. [Online]
Available at: http://bmcsr.com/wpcontent/uploads/2013/06/READINESS-OF-GCC-MEMBER-STATESFOR-CURRENCY-UNION.pdf
Jadresic, E., n.d. IMF policy discussion paper. [Online]
Available at:
https://www.imf.org/external/pubs/ft/pdp/2002/pdp12.pdf
Ugo Fasano , n.d. International Monetary Fund. [Online]
Available at: http://www.imf.org/external/pubs/nft/op/223/
Wikipedia , n.d. Gulf Cooperation Council. [Online]
Available at:
https://en.wikipedia.org/wiki/Gulf_Cooperation_Council