Well, the impression I get from all the way over here (NJ, USA) is that Dubai is the one doing all of this. I don't see a lot coming from elsewhere, so I think it's not so much the Middle East in general taking maximum advantage of this moment as it is Dubai and the UAE.
There is that Kuwait deal you mention, but the Saudi king's tour just looks like more of the same, in terms of it being all about energy. Or did he make some other deals unrelated to energy? Everything else that you mention is coming out of Dubai and the UAE.

I'm not sure the whole Middle East is doing well. The Gulf states certainly are, but they're only a part of the wider area.

Saudi Arabia has shifted to a much more neutral view towards India (vis-à-vis Pakistan) over the past few years. I suspect the exponential growth in India's demand for energy is the only significant reason for this.

Here in the UAE, rampant inflation combined with a linkage to the dollar means that interest rates are far too low- but outside the control of the government. The result is negative real interest rates. Banks, as mentioned above, are shoving money in the direction of anyone who'll take it, and economies are growing ridiculously fast. Dubai claimed to grow something like 16% last year.

Pantom: Dubai is the big innovator in the Gulf. A lot of the big ideas come from here and get copied elsewhere in the Gulf (Emirates airline, Jebel Ali Free Zone, property sales to foreigners, tourism, shopping malls at every corner). But there is lots of money in the region, and richer governments (UAE, Qatar, Kuwait) will spend at home and abroad. Bahrain and Oman are too poor to do much of that, and Saudi Arabia has a large population that it needs to prop up as well.

Hmmm. Writing after a drink or two is never a good idea. In hindsight, saying 'GCC' instead of Middle East would have been far wiser. I'm pretty clearly not talking about Egypt, Iran, Syria or Iraq, so it was sloppy to use such a broad term.

As for Dubai's role - it's a bit of a laboratory for the region. There is quite a lot of money from the rest of the GCC in Dubai, so the dividing lines aren't so clear with these expansionary moves. And the macro-economics of the emirate at the moment aren't quite the point: I'm very bearish about Dubai's domestic economy - I think there's a horrendous bubble that is on the brink of bursting, thanks to such bright moves from the government like responding to inflation with with inflationary policies (salary hikes). But in terms of geo-economics, I think they're playing quite a savvy game, and it is mainly because of the geo-economics that they will survive the inevitable correction and probably do quite well in the long term.

Writing after a drink or two is never a good idea.
Rubbish. Helps things flow.

Perhaps a bit too much upon occasion, but I have written some of my best investment memos after a good number of glasses. Tails off though.

Re the note overall, yes, should say Gulf, not ME or MENA.

Re the bubble, oh good lord yes. DW was kind enough to give me a tour of the new expansions when I was last in town, fairly screamed irrationality.

Question for Dubai though is not so much making the errors - at least they're following some kind of economic policy beyond pure spoils - but how are they going to pull out.

Side observation from an economic amateur who has only passingly read:

Alot of the growth is pure middlemannery, foreign capital investment, or a raw material (petroleum), unless the latter is refined petroleum.

Are there any plans,private or public, for actual manufacturing of marketable products and services? I mean like industrialization, even of small manufacturing.

Speaking of Denmark and MENA these days, one connection I once read between Denmark and MENA is that, except for petroleum, the entire Arab world -- 22 or so nations, 200 million or so people -- export output is equal to Denmark's.

Actually, a lot of the investment looks like diversification. Saudi Arabia is investing an incredible amount of money in refineries at home and abroad, and is tying those into petrochemical plants so that they keep more of the value add. Ditto what IPIC is doing.

Mathew: possible re the figures although I might think that has changed. MENA non-hydrocarbons exports tend to be low added value.

From what I've heard, Qatar has been pretty aggressive lately in terms of trying to overtake or at least take some of the wind out of Dubai's sails. At least, it seems like a lot of the young Lebanese heading Gulfwards (not sure if that's a leading or trailing indicator) are headed towards Qatar these days...

With all the billions of dollars flowing here and there, with all the oil deals in this part of the world and that part of the world, and all the talk about dominating this particular trade or another, I am surprised not to hear one single word about using these vast profits to establish some great universities. Universities with world class engineering departments that can train rafts of students to direct their creative energies to the development of new materials, new metals, new ways to explore space, new ways to harness the energy of the sun, new ways to extract and refine petroleum products, new building materials, new forms of agriculture, etc. And of course, the great affiliated medical and dental schools with the associated research hospitals where the powerful curiosities of well educated minds under the direction of brilliant professors are harnessed to develop cures for the diseases that afflict mankind, particularly the diseases of the region such as malaria and shistosomiasis which affects hundreds of thousands in the Middle East, and, of course, hepatitis A and B, which are widely carried in the region. And, of course, these world class medical schools would train physicians to perform the delicate surgeries involving the heart, the brain, the nervous system, the circulatory system, the skeletal system, and so on. Then, combinations between the medical and engineering schools would conduct research and develop devices and appliances to replace worn or failing joints, to stimulate failing hearts, to repair failed arteries and veins and so on. All to the end of elevating the quality of life for persons everywhere.

It is indeed a pity that you haven't heard of said universities. Might I point you towards a few of the newer American ones in the UAE, Qatar and Kuwait? The UAE is actually malaria-free. On the contrary, car accidents are among the leading causes of deaths.

dear mp,

ever heard of the "qatar foundation"?

you can access their website @ http://www.qf.edu.qa/output/Page1.asp

cheers,

--raf*

Regarding: I am surprised not to hear one single word about using these vast profits to establish some great universities.

In the sense of this comment or generally?

In any case, simply research Dubai and educational initiatives. Lots of money being sunk into unis and the like.

However, it is the sort of thing that has a rather local interest.

with regards to the advancement of science that michael was referring to - there is actually an interesting initiative called SESAME for experimental science (among other things).

I'm afraid the Jordanian initiative is rather wishful thinking, although useful to an extent. Jordan's challenges are rather more basic.

Abdullah does like the image, however Jordanian money is probably better spent on investing in more fundamental education & operational facilities better tied to the economy. Rather like the 99/00 "IT free zone" that was attempted to compete w Dubai.... now hosting textile factories.

Ah yes, textile factories. Between that and manufacturing cheap plastic tchotchkes - and maybe other such things like light bulbs, nails, screws - you've got the ingredients for real development.
Moving up the hydrocarbon chain to refineries and petrochemicals would definitely be a good thing, and logical, as well.
For those who get it, Barron's has a good editorial on the curse of oil this week, btw.

Pantom
Ah yes, textile factories. Between that and manufacturing cheap plastic tchotchkes - and maybe other such things like light bulbs, nails, screws - you've got the ingredients for real development.

For non-oil producers, yes.

Well-trodden.

Moving up the hydrocarbon chain to refineries and petrochemicals would definitely be a good thing, and logical, as well.

Indeed, might as well share in the added value.

Syria and Egypt both have high quality cotton (the former even more than the latter they say) and lots of people who would accept low wages.

So much potential....

dear mh,

syria & egypt ... have horrible bureaucracies & and even worse business ethic. i've once dealt with euro textile manufacturers who pulled out of syria 'cause, when running into problems, the local partner would simply stop responding to calls/faxes/etc. and also not pay. and there's next to no way to get damages through courts, corrupt & inefficient as they are.

see ... it's never a question of "so much potential" but always one of "stupid gits not harvesting it".

--raf*

First, I want to thank Mr. Collounsbury for directing me to the site. In an exchange on another blog when I asked where there existed a opportunity for dialogue with moderate Islam, he "invited" me here and I am grateful.

I wanted to further explain my above comments on education institutions. I am aware of some but not all of the institutions that other posters mentioned. However, my point is that world class universities and sites of higher education are not merely a matter of state-of-the-art buildings equipped with the best of whatever the world has to offer. These are just things, objects that can be helpful but are, in and of themselves meaningless. To quote from the American Council of Education: "It's about the research scientists who explore the oceans . . . the universtiy labs that find cures for disease . . . the schools that train the engineers and architects who plan our cities and build our homes . .. the historians who uncover our past . . . the physicists who make sense of matter . . . the anthropologists who study culture . . . the economists who detect market trends . . . and the writers who teach our journalists and authors. We depend on higher education to produce the knowledge and innovation we need to build our country, train our leaders, and enrich our lives. . . ."

Achieving those ends is not a matter of facilities, but rather of environment and leadership. Substitute "world" for "country" in the last sentence and you will get my gist.

You see, I have what I suppose to be a selfish perspective here. I have children that are about to commence their university careers and if I can offer a fatherly brag, they are off to world class institutions in the fall. This change in my family combined with my awareness of the tensions in the world has caused me to ponder where this all leads. I have come to the belief that if the tensions of the world are to be moderated and we are ultimately able to have competition based on merit and not on group identity or religious affiliation, we are going to require a vastly larger educated populace. I am not condescending here, for we have plenty of what I would call narrow minded folks here in the US as well. This is a process that will take a long time, probably beyond my lifetime, but if not nurtured and encouraged, will drag on and never be realized. We here can talk to each other because we have learned to think and I can discern from many of the posts that the participants are educated, intelligent people whose perspectives are largely formulated by contemplation and not prejudice. Education as opposed to indoctrination, compels one in that general direction and while it doesn't guarantee any particular result, it does encourage a more tolerant attitude. That belief structure lead to my comment above and the amplification here. So while we in business like to think about business, we also need to think about the world in which that business is conducted.

Michael

While educational institutions are vital, and there aren't nearly enough of them here that might be considered world class, such things take decades to build up and fully establish. For a variety of reasons, the Gulf states started off well behind the West in this department, but I see them making large investments in a bid to catch up- Saudi Arabia spends a quarter of its budget on education, if I remember correctly, and is alos spending billions on sending its youth to universities abroad.

You will not see the returns overnight, but I think countries here are moving in the right direction. It just doesn't attract as much news coverage as 50 idiots burning down an embassy.

Raf Bey

One day I have to tell you in person my Syrian story. It involves some hick American businessmen, wood shipments, Syrian firms and a corrupt Syrian origin advisor (my then boss-American firm) telling the poor hicks "You just treat them [the Syrians] like brothers...."

I still recall thinking, "those poor bastards, they're going to get absolutely buggered."

As to Michael, I must have been in a rare good mood, but you're very welcome.

Re the question, if I understand it:
It strikes me for much of the region re education that money is better spent on rather more basic levels.

UAE can afford and should invest in inquiry. Not sure if they quite grasp all of what is needed in terms of free expression, but Dubai with its various carve-out projects does seem to be pulling in the talent that may be required to be a nucleus of inquiry and establishing an example of moderation and fairly free inquiry.

The wider context of the environment is, I think one addressed through more basic development in the economic realm - stronger 'middle class' presence (who will remain pious but unintersted in too much blowing up things like most good shopkeepers) is a better drag-along for investment in education than state led initiatives.

Finally w respect to Uni spending and my basic education comments: I am strongly of the opinion that most Uni education in MENA region is very poorly spent on very poorly adapted degrees. Leading to massive unemployment among graduates, and radicalism.

Improved basic education spending would have better near term returns.

I think you are in a good mood more often than you are wont to admit. I liked how you took on old Luka elsewhere.

In any event, you make a good point that grand universities aren't of much good if you don't have that flow of educated students that have come up through a system that stimulates inquiry and prepares them for the higher pursuits. I see childrens' faces in some of the awful news photos and I often wonder what kind if lives they will lead.

I am pleased to hear that the focus on education is increasing. It will serve us and our children well regardless of where we live.

Michael