July 31, 2009
Subtle Items to Follow re Gulf Long Term Development.
The following article seems quite tedious. In fact it is a step in an interesting denouement, and should be real signals as to whether the Gulf is really developing or is merely a oil and gas financed mirage:
FT.com Bahrain central bank intervenes
Bahrain's central bank said yesterday it had taken control of two Bahrain-based banks owned by two prominent Saudi companies that are locked in a dispute as they struggle with financial difficulties
Oddly five years ago I had rather more faith in Dubai and Bahrain. It's queer, the oil boom that fuelled the past few years of development significant damaged my expectations almost in line with the degree to which they captured Global Market attention. Let me first say that if you are Hot Money investor (i.e. a trader) and are clued in enough to be right on top of regional developments (clued in meaning not that you're clever with your maths and are a Zawya subscriber, etc, but that you have the right personal connections etc to have a sense of what is behind the published infos - short term [i.e. less than 5 yr holding period] trading in MENA on published information is a loser's game).
I rather think that there is no long term win in the Gulf, no real diversification. Dubai can not be Singapore because its back-region is too weak (although if Iran does not shape up, Dubai as Iran's Hong Kong can work - but Dubai as Saudi Arabia / Emirates / Kuwait Singapore is a failure: no matter what the gulf does, it is unsustainable post-oil, nothing relative to climate trends nor own native competences nor other factors suggests they can overcome). And generally if you are looking at a longish term, I think reforming 'real' countries like Syria or farther along reformers in the Maghreb, or Turkey or potentials like Iran are far, far better bets. As would be a country like Oman, insofar as if Oman, even at this late date, decided to create (and do right) a mini Dubai, it would easily capture the Dubai Asia traffic and be a better geographical partner for Iran and the Asian traffic. Pity really, Oman is leaving mega money on the table as they are perfectly placed to do Dubai, but better insofar as Dubai has proved the model can work - I do not mean here the flashy towers, but the trade and finance logistics. The flashy towers and the last 4 years of frenzy were a gross mistake for Dubai, one that they will pay dearly for in the long term.
TrackBack URL for this entry:
Vaguely on topic: I read through the Economist's Special Report on the Arab World on the train to work with half a mind to writing an Aqoul post on it, but there just isn't enough there. All boilerplate that I'd seen before, and I haven't even been paying much attention in almost three years.
Symptomatic: their substantive coverage of Al Jazeera is basically just a synopsis of Marc Lynch's argument in his book, which is four years old now.
Posted by: Tom Scudder at July 31, 2009 11:53 AM
Oman doesn't seem to be especially interested in fast-tracking, well, anything. With regard to logistics, you may recollect that Oman tried to go head to head with Dubai's ports a few years ago using Maersk's help. While they certainly have a better location, they couldn't compete. (Aden tried at the same time with help from Singapore, but Yemen is Yemen.)
I think Dubai has yet to figure out what the next big thing will be, now that real estate has collapsed. (It might be a while, given the current state of things.) In terms of serving as a way of entering a bigger economy, the biggest potential prize would be India, rather than KSA/Iran. Far from clear whether that is possible, though.
DW: re Oman, yes I know, thus the qualifier decided to "do right." Very obviously half-assed efforts will fail.
Given the geographical positioning, I do not think Dubai can pull it off. Not impossible, to be sure, but they need things with Iraq, Iran and KSA to go just about perfectly. Of course, in the medium term they will do well, but long, I think not.
Posted by: The Lounsbury at August 2, 2009 07:34 AM