May 31st, 2010
10:46 AM GMT
This week I made the trip between Abu Dhabi and Dubai four times in as many days, shuttling between our regional hub in Abu Dhabi and hotels, conferences and interviews in Dubai.
On one occasion, I hitched a ride with a colleague, who goes back and forth every day, who bore witness to the challenges of Emirati high-speed travel. Drivers frequently flash their high-beam headlights to intimidate those not going “fast enough” in the fast lane and sometimes use the inside shoulder of the motorway to leave them behind.
The traffic between the two emirates is intense during morning and early evening rush hours, with the draw of the capital’s wealth creating more jobs in tourism, exhibitions, construction and development. But, it is not the road traffic that is most striking, but instead the shuttle diplomacy. The $3 billion Emirates Palace –- as seen in the new "Sex in the City" movie or earlier in action film "The Kingdom" - serves as a hotel, a meeting venue for the Abu Dhabi government and, lately, as a hub for world leaders.
In the morning, I saw the Prime Minister of Kazakhstan who was in town to meet with the Crown Prince of Abu Dhabi and his influential half-brother who is also owner of the Manchester City football club. By sunset, German Chancellor Angela Merkel and a much larger delegation arrived on the scene. The Central Asian leader stopped in Abu Dhabi for 24 hours to advance investments in his vast country, the latter was on the first leg of a four-state visit including Saudi Arabia, Qatar and Bahrain.
Both of these leaders were preceded by one who can be defined as a man with a more urgent matter: the Greek Prime Minister George Papandreou. With two "Ds" on his report card - a record budget deficit and debt - he invited attendees of the Arab Economic Forum to consider Greece when sizing up opportunities. Papandreou pointed to the tourism and technology sectors as obvious places to start.
These are the visits we know about. Equally intriguing are the others that are intentionally off the radar, which fit into the category as discreet but necessary.
The Gulf States are a magnet for attention as the UAE is home to the largest sovereign wealth fund, the Abu Dhabi Investment Authority. There are another seven funds that are helping broaden the economic base of the Emirate beyond hydrocarbons with investments in industrial groups that include trade offsets and/or technology transfers. In sum, it is an “I will invest in you if you, in turn, will invest in us” type of situation.
In light of the Greek debt tragedy and Angela Merkel’s five-month resistance to an EU led bailout, it is not surprising Merkel needed to pay a visit to these high-powered investors. Let’s not forget, sovereign wealth funds, with the Middle East members representing $1.5 trillion dollars, have been hedging their bets against the dollar in the past few years. They want to know if we are going back to where this process started a decade ago, at nearly one-to-one with the U.S. currency.
Merkel cannot overlook the interest these funds have in German industry. Daimler lists the Abu Dhabi-based fund, Aabar, as its largest single investor and the Kuwait Investment Authority as another. Seventeen percent of Volkswagen is in the hands of the Qataris and Deutsche Bank has its own share of Gulf investment. Strategic plays like these by the SWFs make the announcement of a $150 million deal for the German industrial giant Siemens this week look like small fry.
A few years ago, the leadership in Abu Dhabi put in place a multi-pronged branding strategy. This now includes hosting F1 racing, a flag carrier Ethiad with global ambitions, top-flight exhibitions, conferences and eventually a branch of the Louvre and Guggenheim museums.
One cannot contend with the style and touch in which they have been or are being developed. A whole eco-system (as in economic) has been built to support such activity. Room rates are finally coming down with the introduction of more four and five-star hotels and on that road trip from Dubai one can see development after development on the way.
A decade ago when the iconic, Burj al Arab opened in Dubai global celebrities made the sail shaped hotel a must stop visit on their itinerary. Fast forward to the year 2020 and we will recall time when different members of the global elite put the Gulf and specifically Abu Dhabi on their schedule. Despite the vast expanse inside the Emirates Palace hotel, the traffic these days is nearly bumper-to-bumper.
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