Greek Crisis and GCC Resilience

Whatever the deliberations on Greece’s current economic plight, the question is whether the country should remain in euro zone at all.

Amid the dark cloud hanging over the country, there is a silver lining showing that Saudi Arabia and the rest of the GCC countries have exemplified themselves as resilient economies with strong structural growth drivers. Their exposures to Greece through trade or investment are minimal, not systemically significant.

This also demonstrates that the GCC has the good fortune of being a much more homogeneous region than the euro zone. Indeed, all the currencies (except Kuwait’s) have been pegged to the dollar for years. The GCC has embraced the Maastricht criterions and should have the ability to learn from the mistakes of the euro zone in terms of managing risks.


The Greek crisis is inevitably raising questions about the planned Gulf monetary union. In this context, it is important to bear in mind that the Maastricht criterions underpinning the euro were a realistic regulatory framework but they were repeatedly violated. Once the crisis erupted, there was no established crisis management mechanism in place. This resulted in significant delays in addressing many of the problems.

Nevertheless, from a global economic perspective, finding a sustainable solution to the Greek problem is important as a failure to do so will weigh on sentiment.

Somewhat paradoxically, a possible positive effect of the Greek crisis may be a greater reluctance on the part of the world’s leading central banks to tighten monetary policy. Continued permissive money market conditions would be good for commodity and asset prices as well as the broader cost of capital. They would also likely counter or contain any volatility.

However, there is a renewed emphasis on keeping Greece in the euro zone. This has come from none other than Jean-Claude Juncker, head of the European Union’s executive branch, who says he will “fight until the very last millisecond” for a deal that keeps Greece in the euro.

French President Francois Hollande too said he’s going to do everything that he can to keep Greece in the euro.

Greek Prime Minister Alexis Tsipras says he’s ready for a compromise deal with European creditors and that an agreement is possible if “all parties want it.” All must stand firmly behind Greece in tough negotiations with its European creditors if they want the country to remain in the euro zone and I think this is in the best interest of all concerned countries.


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