However, the author, Afshin Molavi, sadly did not resist the tendancy of writers from this sort of background (i.e. American partisan political think-tanks) to knock back a good dose of ideological rot-gut.

Let's start with this:

Last month, as images of war and carnage in Lebanon filled Arab airwaves, more than 10 million Saudis joined together for a common goal. A massive political protest? No. A petition calling for an end to the fighting? Not that either. A boycott of American goods? No. So, what did 10 million Saudis -- more than half the adult population -- do? They bought stock.

For 10 days Saudis rushed feverishly for a piece of the kingdom's most ambitious development project ever: a $27 billion city that will create a seaport, an industrial district, a financial center, an education and health-care zone, resorts, and a residential area. The kingdom is no stranger to massive infrastructure projects, but there's an interesting twist here: The government won't be financing this one; that task will be up to wealthy Saudi investors, public share offerings and a high-flying Dubai-based property company.

Well, I suppose it is a nice story to sell to the Wall Street Journal fumblers, but frankly KSA speculative madness over quasi-public mega-project schemes of dubious commercial logic and even more dubious transparency says not as much as the author thinks about the new Middle East.

It is relatively interesting and important that such projects are not being done under purely governmental auspices, but this is hardly an instance of private sector initiative - it is rather more in the quasi-Statist tradition of directed investment of private money of the rentier elite on the private side collaborating with the State.

Now, that is certainly a step forward relative to historical practice in the Gulf post 1970, but I would not have started an Op Ed out celebrating the Saudi stock bubble.

I'd further would suggest being a trifle more... critical minded about Emaar would be well advised, given the underlying thinking in the article is about private sector aside from the governments moving things forward :

The company, Emaar Properties, the most widely traded stock in the United Arab Emirates, also happens to be the richest real estate development firm in the world, with a market capitalization near $25 billion. It's also one of the most ambitious. On Aug. 1, as war raged, the company bought a major British real estate firm. The next day it announced an expansion into Algeria. It's building nearly 100 shopping malls in India, and retail and residential properties from Casablanca to Cairo to Karachi. Oh, and it's also constructing what will be the tallest tower in the world, known as the Burj Dubai.

Emaar also is not exactly free of Emirati official interest.

However, it is an interesting symbol of a relatively much more sophisticated approach on the part of Gulf money in placing their funds, and the author cites without properly highlighting the degree to which Gulfi equity is going into emerging markets connected to the Khalij.

This is a relatively important change - Anectdotally the Khalij is far more interested in putting its money in the emerging markets - and in private equity (I mean equity investment in more or less private investments, rather than govenrmental bonds, etc) - than the last oil boom. There is less blind buying of Western assets - of course now there are more opportunities in far more liberal emerging markets.

While only time will tell if the placements, either in lsited equities or in private equity and near equivalents, are better done than last round, in my opinion the quality is clearly far better. Lots of people will surely get burned in this liquidity bubble, but it will not be as bad as last time, and there is far more real private value being created.

It goes on. As the headlines screamed crisis, the business pages told another story. The transport company Aramex, the first Arab firm to go public on the Nasdaq Stock Market, announced a 73 percent rise in second-quarter earnings. Bahrain-based Gulf Finance House, a leading Islamic finance bank with global investments, announced an 87 percent increase in second-quarter net profit. The billionaire Saudi businessman Prince Alwaleed bin Talal, who owns nearly 10 percent of Citigroup, publicly criticized management, sending tremors through the company. And the Middle East construction boom -- mostly centered in the oil-rich Arab states of the Persian Gulf -- surpassed the $1 trillion mark.

The supposed contradiction - which I understand of course the author is highlighting for the readership and likely did not share - was false, of course. The crisis headlines have doped the hydrocarbons market pricing and poured yet more capital into Gulf coffers.

Aramex, by the way is a good company - although it has a funny financial history - the NASDAQ listing (since delisted) was a clever play back in the US market boom. Aramex by the way is the Arab region DHL or Fed Ex. The CEO, Fadi Ghandour, is a sharp cookie.

One of the early signs, back when I worked on Iraqi equity investment proposals, that things were going badly wrong was conversations with Ghandour and company about security. They were early into Iraq and being in the logistics business started feeling the rapidly declining security and the incompetence of the US occupation administration early on. They were, if you were smart, the canary in the mine. When Ghandour started talking about his people getting hit on the roads, etc., you knew things were turning wrong. When he started saying that in public, you knew things were fucked into a cocked hat.

When Secretary of State Condoleezza Rice said that the Lebanon war was a sign of the "birth pangs of a new Middle East," she was both dramatically wrong and partially right. A "new Middle East" is indeed being born, but it has little to do with Lebanon or President Bush's democracy agenda. The "new Middle East" is forming in the boardrooms of new and innovative businesses, in assertive private sectors demanding reform, in booming equity markets, cash-rich banks, state-owned investment houses and individual investors with global outlooks, and in a new generation of entrepreneurs and businessmen (and women) creating real companies with real underlying values.

I would largely agree with this statement - if tempered with the qualification that the private sectors are "becoming" more assertive and "starting to" demand reforms, or at least oppose backsliding.

Queerly what I hear from American diplos, the US government is obsessed with "democracy promotion" and other wishy washy efforts doomed to failure (as there is no way that US backing to political parties or other political actors is going to work, above all in an envionrment where the US has gratitiously pissed away its credibility) rather than working on economic reform that would do far more to support its agenda and would be far more likely to actually achieve real results.

The folks at the Carlyle Group see this. Last week, as "Middle East crisis" graphics flickered on our TV screens, they announced a $1.3 billion fund for investment in the region. In the past, Carlyle principally saw the Middle East as a source of funds for investments elsewhere. This time it sees the Middle East as an investment target.

Carlyle is not alone. The big investment banks -- Morgan Stanley, Goldman Sachs and Lehman Brothers -- are increasing their presence in the region, and Western private equity and hedge fund money is circling.

Of course record oil prices have helped. The Institute of International Finance reports that gross domestic product in the Gulf Cooperation Council countries -- Saudi Arabia, Oman, Qatar, Kuwait, the United Arab Emirates and Bahrain -- has grown 75 percent over the past three years, making the GCC zone the 16th-largest economy in the world. Those nations will earn half a trillion dollars this year, mostly from oil and gas exports.

Liquidity boom.

It's a bubble and the usual suspects are circling.

GCC businesses, banks and state entities are aggressively investing across Asia. Dubai's government announced some $2 billion of investments in Pakistan. GCC investments targeted at China and India are proliferating. Malaysia and Indonesia are also trendy investment spots, and investors also are pouring money into projects in Jordan and Egypt and North Africa. This brings up a new twist in the "new Middle East." The old civilizational centers -- Persia (today's Iran), Mesopotamia (today's Iraq), the Maghreb, Syria and Egypt -- are falling behind the more nimble and business-minded places such as Dubai, Qatar, Abu Dhabi, Bahrain and Oman.

Eh.

Bullshit.

Falling behind Dubai, sure, although Dubai is playing off-shoring of liberalisation - as are the other Emirates area statelets. They make nice examples, but in themselves are not truly change drivers. Oman? Give me a break.

He might was well have written "State's with massive capital resources, tiny populations and authoritarian regimes have an easier time moving economic reform forward when not faced with the pressures of mass unemployment."

That's why Egypt's economic reforms matter so much. A GCC boom coupled with cross-border investments certainly helps the region grow. But a thriving Egyptian economy would be a huge boost in the Middle East. The International Monetary Fund predicts a healthy 5.2 percent growth rate in 2006 for Egypt. The government's economic "dream team" is winning plaudits from the local private sector. A wave of Egyptian business tigers is forming. A new mortgage finance law bodes well for the future: By making homes more affordable, it could serve as the catalyst for reviving Egypt's long-suffering middle class.

This paragraph is typical of the confusion he has over real change and governmental spin.

Certainly Egyptian economic reforms have been relatively sustained, but plaudits? In certain circles.

Egyptian Business Tigers?

I've heard that spin before, and it remains as fake as it was in 93.

Maybe in the near future.

But the liberalising of the housing finance situ is a real change and given the utterly awful nature of the Egyptian housing market, can only improve the situation.

And we might be able to see Egyptian films for the first time in 30 years not revolving around the fucking apartment crisis.

And strong middle classes are the linchpin of sustainable democracies.

More or less.

All of this raises a fundamental question: Are we witnessing simply a new way for elites to make more money or a lasting shift toward the kind of economic growth that will lift all boats? That's the real question U.S. policymakers ought to be grappling with, and it's the real "birth pangs" we need to be watching closely.

Very true.

Well, largely true and decent advice.

Better than the usual nonsense one hears.