March 5th, 2010
02:36 PM GMT
Oxford, England - I was taken on a tour of the sprawling future home of the Oxford Center for Islamic Studies now under construction on the grounds of Magdalen College.
Senior fellow Dr Hasan Abedin illustrated how the center is sourcing the best materials from the Muslim world: finely crafted wood from Malaysia, colourful stone from Yemen and an ornate, but tasteful tower that will greet visitors.
The Prince of Wales is patron of the center, which was developed to “encourage a better understanding of the culture and civilization of Islam." It was in that spirit that I was invited to speak at the “Muslims in the Media” seminar. The aim was to give the audience of students, scholars and retired Foreign Service experts a feel for what is happening on the ground in the region.
I drew a picture of near-term challenges, but long-term opportunities. The crisis over the past 12 months was not overly painful in the Middle East, compared with their counterpart economies in Europe and America. Dubai has stabilized after the debt bombshell it dropped at the end of November and if we look further afield, the market of 17 countries and more than 300 million consumers should continue to offer opportunity for investors..
I talked about how I see the Middle East at the crossroads of East and West, and how over the next decade it should truly garner a place as the fourth trading zone alongside Asia, Europe and the United States. After all, 10 percent of the G-20 is made up of countries from the region, Turkey and Saudi Arabia. Jim O’Neill of Goldman Sachs has evolved his emerging market vision to include the “Next 11,” the next drivers of economic growth. Three of the countries are from the region: Egypt, Turkey and Tunisia.
There were plenty of nods of agreement in the audience, as if I opened some new doors of thinking to a group where knowledge was not in short supply.
My discussion was not sugar-coated by any means. We talked about what I see as the most pressing issues of the decade: stubbornly high youth unemployment of around 25 percent and a wealth gap that leaves those in countries like Yemen yearning for more opportunity. Combined, those real life challenges will intensify the need for change and swift action.
After a couple of video examples of our coverage, the floor was opened up for questions. Instead of the two or three polite enquires I was expecting, I fielded questions for a more than a half hour. While most were well aware of the oil and gas wealth leading to a construction boom and a wave of sovereign wealth investment in the past few years, they seemed skeptical about my other premises.
I drew a comparison with the NAFTA and GAFTA (Greater Arab Free Trade Agreement). While I noted the 17 signatory countries don’t act like a single market due to old-time rivalries, barriers to trade are coming down and greater unification will be in order. Eyebrows were raised, but the audience was not convinced.
I highlighted the creation of a Gulf Central Bank in Riyadh and a single currency that should be launched in the next five years. Alright, instead of all six coming on board, only four have committed to this effort. Again, questions were raised about whether this was a real effort and if it will actually happen.
Finally, this group saved their harshest analysis for the role of the sovereign funds. I noted that the strategy is evolving. Money is staying closer to home and being invested for example in North Africa - which is a good thing. Other funds are investing in industrial groups like Daimler and GE, but are expecting a technology transfer alongside their equity stakes. “Nice try, John” was the look I was given back.
After we finished the session, I was invited to break bread in the fabled dining hall of Christ Church College. We had a healthy discussion about where the region is going and why this audience has not warmed up to the regional build out.
What they continue to see are individual countries often competing in the same sectors and sovereign funds quick to jump into high-profile equity stakes or buy trophy properties at the peak of the market. The pre-crisis moves have left a lasting impact on this group of informed observers who are eager to see if the region can deliver lasting change for the next generation.
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