Abu Dhabi, UAEMonday 16 September 2019

UAE and Saudi Arabia unveil seven point co-operation plan including new cryptocurrency

The deal would see the pilot of a government-backed cryptocurrency and cross-border payments

Sheikh Mohamed bin Zayed is received by Crown Prince Mohamed bin Salman in Jeddah last year when the joint body first met. Rashid Al Mansoori / Crown Prince Court - Abu Dhabi
Sheikh Mohamed bin Zayed is received by Crown Prince Mohamed bin Salman in Jeddah last year when the joint body first met. Rashid Al Mansoori / Crown Prince Court - Abu Dhabi

The UAE and Saudi Arabia have unveiled a landmark agreement that will see the two countries co-operate in the development of a joint cryptocurrency, a form of customs union and a plan to ensure goods and supplies flowed in the event of a crisis.

It also included a plan to allow Saudi and Emirati SMEs to bid for procurement contracts in both countries and set out measures to ensure those with disabilities can travel by air with greater ease.

The two states struck the seven-point deal in Abu Dhabi on Saturday during a meeting of the Executive Committee of the Saudi-Emirati Co-ordination Council.

The cryptocurrency pilot will be seen as the most significant undertaking to date.

Supporting financial technology and SMEs is seen as a crucial way to move on from reliance on petro-dollars and make the shift to a knowledge economy.

Other measures focus on improving financial literacy among young people to improve spending habits and closer working practices in the aviation sector.

Mohammad Al Gergawi, Minister of Cabinet Affairs and The Future, from the UAE side, and Mohammed bin Mazyad Altwaijri, Minister of Economy and Planning, from the Saudi side, said the deal covered the fields of services and financial markets, tourism, aviation, entrepreneurship, customs and security, among others.

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The council first met in Jeddah last summer with broad focus on three main areas: economic, human and knowledge, and political and military co-operation.

It is chaired by Sheikh Mohamed bin Zayed, Crown Prince of Abu Dhabi and Deputy Supreme Commander of the Armed Forces, who at the time described the arrangement as a "historic opportunity to create an exceptional Arab model of cooperation", and Saudi Crown Prince Mohammed bin Salman.

The seven new initiatives are:

1. Saudi-Emirati cryptocurrency pilot

"The cross-border digital currency will be strictly targeted for banks at an experimental phase with the aim of better understanding the implications of Blockchain technology and facilitating cross-border payments," state news agency Wam reported on Saturday evening.

It said the virtual currency relies on the use of a distributed database between the central banks and the participating banks from both sides. It seeks to safeguard customer interests, set technology standards and assess cybersecurity risks. The project will also determine the impact of a central currency on monetary policies.

A technician monitors cryptocurrency mining rigs at a Bitfarms facility in Quebec, Canada. Bloomberg
A technician monitors cryptocurrency mining rigs at a Bitfarms facility in Quebec. Bloomberg

2. Fast track customs for key firms

This facilitates the flow of traffic at the entry ports between both countries and at customs outlets through a fast track system, Wam reported. Selected companies - 41 from Saudi Arabia and 40 from the UAE - would be listed as Authorised Economic Operators and able to use the system.

"The initiative will contribute to smoother operations between customs and commercial establishments, and facilitated trade between the two countries," Wam reported.

A ship is offloaded at Khalifa Port in Kizad, Abu Dhabi. The government is exempting industrial imports from customs tax from January 19. Courtesy Abu Dhabi Ports
A ship is offloaded at Khalifa Port in Kizad, Abu Dhabi. Courtesy: Abu Dhabi Ports

3. Procurement opportunities for SMEs

This would allow small and medium-sized businesses in the UAE and Saudi Arabia to bid for contracts in both countries, according to the announcement.

Supporting SMEs is seen as a key way to stimulate the post-oil economy.

Dubai, United Arab Emirates - January 17, 2019: General View of a construction site where building is taking place. Thursday, January 17th, 2019 in Arjan, Dubai. Chris Whiteoak/The National
SMEs would be able to bid for public sector contracts in both countries. Chris Whiteoak / The National

4. Joint supply chain in times of crisis

A joint training exercise will be undertaken by the two countries to test how well prepared the supply chain would be for a crisis or natural disaster. It will also identify points for improvement. That is expected to mean the countries could rely on each other in the event of shortages of food or key goods.

epa07297544 A woman does her shopping in a supermarket in Harare, Zimbabwe, 18 January 2019 as the situation in the country slowly goes back to normal after three days of protests after fuel price increases. Several people were killed during the fuel protests that began on 14 January 2019 following a 130 per cent increase in the price of fuel by the government of Emmerson Mnangagwa. EPA/AARON UFUMELI
A joint aid plan would ensure supply routes run during emergencies. EPA

5. Better disabled access in airports

The initiative between the two countries is to enhance the experience of "People of Determination" by ensuring the compliance of disabled-friendly airports in both countries, Wam reported.

It will standardise travel procedures and regulations for accompanying family members and ensure airport staff are fully trained to support them.

A disabled traveller is boarding in a plane on August 8, 2018 at Roissy Charles de Gaulle airport, north of Paris . (Photo by JOEL SAGET / AFP)
Better access and training for airport staff will be looked at. AFP

6. Money management for children

This section of the deal will focus on ensuring children aged between seven and 18 are taught how to manage their money properly to prepare them for adulthood.

The programme will "enable them to simulate the business world to learn about saving and smart spending" as well as a culture of entrepreneurship, Wam reported.

Children will be taught better financial management and basic entrepreneurship.

7. Common market for civil aviation

The Saudi-Emirati common market for civil aviation aims to achieve "comprehensive integration and cooperation in the civil aviation sector in vital areas" including air navigation, safety and security, and investigation of air accidents.

The market is to be considered to be an "advanced stage of economic integration".

Abu Dhabi, U.A.E., July 25, 2018. Portrait of Emirati woman in the field of air traffic control, Nouf Al Afeefi, air traffic control supervisor, Abu Dhabi, Sheikh Zayed Air Navigation Centre. Victor Besa / The National Section: NA Reporter: Nawal Al Ramahi
Air traffic controllers at Sheikh Zayed Air Navigation Centre. Victor Besa / The National

The Emirati hosts concluded the meeting with a visit for their guests to Louvre Abu Dhabi and to the Roads of Arabia exhibition, which showcases the archaeological history of Saudi Arabia and the region, which is on display until February 16.

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Updated: January 20, 2019 10:47 AM

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