The leaders of the six Arab nations that form the Gulf Cooperation Council began gathering in the Qatari capital of Doha today for a two-day summit meeting. They will tackle two thorny issues: how to deal with the precipitous decline in the value of their dollar holdings at a time of unprecedented high oil revenues; and how to deal with a guest that they themselves invited.

The guest is President Mahmoud Ahmadinejad of Iran. Although Iran borders the Persian Gulf and is an Islamic country like the six members of the council—Bahrain, Kuwait, Oman, Qatar, Saudi Arabia, and the United Arab Emirates—it is almost totally a Shia state, while the six are largely Sunni. More important, there are concerns that Iran may work toward destabilizing, or even toppling, the monarchies that govern the six states. Indeed, Gulf security—including Iran’s alleged nuclear ambitions—is among the issues on the table at the summit, according to the organization's secretary general, Abdul Rahman bin Hamad al-Attiyah of Qatar. (American intelligence agencies said today in a report that Iran halted work on a nuclear arms program in 2003—a finding that may help ease tensions over Iran.)

Yet the issue that is probably more pressing for the Gulf leaders concerns the growing pressure for them to abandon their pegs to the falling U.S. dollar. The chairman of the Abu Dhabi-based Arab Monetary Fund, Jassem Al-Mannai, said last week that the G.C.C. countries should switch to a "managed float," or peg their currencies to a basket, including the euro, the British pound, and the Japanese yen, all of which have been strengthening in recent months, while the value of the U.S. dollar has declined by more than 10 percent since 2000.

"There is no currency exchange system suitable for all ages and places.... In the past, G.C.C. economies were negligible and now they have to adopt polices that suit their economic progress," Al-Mannai said, adding that the E.U. was now the main trading partner of the G.C.C. countries, with some $165 billion in trade annually, or 35 percent of their overall foreign trade. Asian countries account for another 30 percent of trade, and the U.S., only about 10 percent. Indeed, the U.A.E., the second largest economy in the council after Saudi Arabia, has called for all Gulf oil producers, which possess 38 percent of the world's proven crude oil reserves of 1.3 trillion barrels, to switch from fixed exchange rates to currency baskets.

"Revaluation will not be in the interest of Gulf countries, and it will not help solve the problems that they are facing, because nobody can give us a guarantee for the dollar not to fall further," Al-Mannai said. "It will not give these countries the freedom to fight inflation, which is posing a growing threat to their economies."

His reference was to the fact that inflation is at a 10-year high in Saudi Arabia, a 16-year peak in Oman, a 19-year high in the U.A.E., and near a record in Qatar. Al-Mannai, whose organization was founded in 1976 with the goal of creating a single currency among 22 Arab states and promoting trade among them, said that the U.S. Federal Reserve was cutting rates "to contain the fallout from a mortgage debt crisis" and that Gulf central banks were following suit "despite the risk of stoking inflation."

Although official figures cite an inflation rate of about 10 percent in the Gulf region, private-sector analysts assert that the figure is closer to 25 percent. In Dubai, for example, rents have doubled in the last two years; and gasoline prices have risen by as much as 40 percent.

According to a report in Reuters, rising prices of essential commodities have triggered calls for a national wage increase in Saudi Arabia, demands for price controls in Qatar and Oman, and demand for higher pay by migrant workers in the U.A.E. Indeed, Sultan bin Nasser al-Suweidi, the governor of U.A.E.'s central bank, recently cited inflation in his call for reform, saying dollar pegs have forced Gulf central banks to track U.S. monetary policy to maintain the relative value of their currencies, Reuters said.

Of the six G.C.C. countries, Kuwait has already begun pegging its currency, the dinar, not to the U.S. dollar but to a currency basket.

The question of depegging local currencies has taken on special urgency because of the vast remittances by unskilled workers to their homelands, mostly in Asia. According to N. Janardhan, a U.A.E.-based analyst, these remittances amount to more than $30 billion annually. But the decline in the value of the U.S. dollar has affected the net worth of the money they send home. Holiday plans are being canceled, and many unskilled workers have sent their families back home because the cost of living has become unaffordable.

In fact, Janardhan said, in the last few days, currency dealers in the region have stopped converting U.S. dollars in anticipation of what would amount to a revaluation of roughly 5 to 8 percent of local currencies through a depegging from the dollar.

But the G.C.C. leaders who are gathering in Doha surely would know that depegging their currencies from the U.S. dollar is easier said than done. After all, oil—which provides their livelihood—is still traded in dollars. Moreover, the OPEC countries have more than $4 trillion invested in various projects globally, not to mention in U.S. Treasury securities, which helps America cope with its nagging trade and budgetary deficits. And there's the political reality that, in the final analysis, the U.S. is the guarantor of the security of the Gulf countries— and that it may be politically unwise to challenge Washington.

So will the Gulf leaders still go ahead with a depegging? Chances are that a decision has already been made behind closed doors and the summit would be a venue to showcase it.

In the meantime, there is Iran.

Iran is certain to bring up the issue of trade: It has proposed a regional free-trade pact with the six Gulf nations. Of Iran's global exports of $100 billion annually, about $2 billion go to the U.A.E.—mostly agricultural products, including pistachios—while Iran imports more than $10 billion worth of electronic and other manufactured goods from the U.A.E., mainly through Dubai. Iranian officials have said that Iran has invested more than $120 billion in the U.A.E.'s economy through various entities. But since Iran, like most of the G.C.C. countries, is primarily an exporter of crude oil and natural gas, it is difficult to see how a wider trade arrangement can be fashioned regionally that would benefit both sets of players. After all, G.C.C. countries have very little by way of indigenous manufacturing; their outbound non-oil trade tends to consist mainly of re-exports.