Trade

Saudi Arabia Opening to Tourists

Tue, 30 Sep 2008 10:56:42 -0400

Many people snickered when Saudi Arabia announced a few years ago that it would create a tourism industry as part of a long-term effort to diversify its oil-dependent economy.

Tourism in Saudi Arabia? The forbidding alcohol-free kingdom where women are veiled, shops close at prayer time, religious enforcers patrol the streets, criminals are beheaded in public and the most important sites are off-limits to non-Muslims? What a joke.

Perhaps it’s time to stop chuckling. Crystal Cruises, a luxury cruise ship line that caters to affluent Americans, has added the Saudi port city of Jeddah to its ports of call. The Crystal Serenity, a 1,080-passenger liner, is scheduled to make its first stop in Saudi Arabia on March 23, 2010.

This is intriguing news for travelers, but it represents much more for Saudi Arabia. It can be read as a statement from the country’s rulers that they are determined to open up the country and engage with the world, despite what is certain to be outraged opposition from Saudi Arabia’s xenophobic religious and social conservatives.

For decades Saudi Arabia was difficult for non-Muslims to visit, but it mattered little because few people other than pilgrims headed for Mecca wanted to go there anyway, except on business. Now under the leadership of King Abdullah, the country is opening itself more and more to outsiders—issuing multiple-entry visas, creating an international university and hosting regional sports tournaments and even cultural events. The efforts of the Supreme Commission for Tourism are part of that trend, which has been driven mostly by the economic imperatives of creating new jobs and building self-sustaining industries beyond oil and petrochemicals.

The commission, headed by Prince Sultan bin Salman, an American-educated astronaut and grandson of the kingdom’s founder, has focused mostly on domestic tourism. The aim was to persuade Saudis to spend their holidays at home, on the Red Sea beaches or in the mountains of the sparsely-populated southwest. Welcoming boatloads of non-Muslim foreigners is another matter.

The cruise passengers may provide temporary employment for bus drivers and tour guides, but it is likely their presence will agitate the monarchy’s vocal Islamist critics. In Egypt, cruise ship day-trippers travel in armed convoys because of the security threat. What will be the security challenge in Saudi Arabia, where in recent years extremists have killed French travelers and attacked the US consulate in Jeddah?

According to Crystal’s announcement, the Serenity is scheduled to arrive in Jeddah at 8 a.m. and depart at 6 p.m. the same day. This is standard practice for cruise lines, which organize day trips to onshore sites and then sail on to the next destination in the evening.

But how many of the Serenity’s passengers, who on most cruises include many Jews, will want to disembark in Saudi Arabia? The State Department’s most recent travel warning “urges U.S. citizens to consider carefully the risks of traveling to Saudi Arabia” where “there is an ongoing security threat due to the continued presence of terrorist groups...”

For the passengers who do go ashore, there are other questions: What will the women wear? What will there be to see? Mecca is a short drive away but off-limits. The great Nabatean ruins at Midan Saleh and the vistas of Asir National Park are too far away for day trips. And will any passengers be permitted to disembark on their own and visit Jeddah independently of an organized tour, as some routinely do in other ports?

On its Web site, Crystal describes Jeddah as if it were an Arab Barcelona: “Jeddah is a dynamic and cosmopolitan commercial hub. It is also an artistic one, with public art on display on its roundabouts. In fact, the collection, which includes works by Alexander Calder and Joan Miro, makes the city the largest open-air art gallery in the world. For shopaholics, Jeddah is a paradise...And for anyone who appreciates scenic beauty, there are lovely beaches and a picturesque corniche, where locals and visitors alike can be found relaxing and drinking in the views.”

Jeddah is indeed interesting, but also hot, crowded and choked with traffic. The restored old city and its souk would take perhaps an hour to visit. And, while there is good snorkeling in the Red Sea, few beaches permit western-style bathing attire.

Crystal Cruises is Japanese-owned and its ships are registered in the Bahamas, but its offices are in Los Angeles and the great majority of its passengers are Americans. Like most cruise lines, it is always looking for new and offbeat destinations, and its 2010 itinerary in the Middle East reflects that quest. In addition to Jeddah, the Serenity is scheduled to call at Bandar Abbas, Iran; Khasab, Oman, on the Strait of Hormuz; and Ashdod, Israel.

We Want Your Help and Your Business - Unless Its Arab

David Mack — Tue, 14 Mar 2006 12:00:00 -0500

The decision by the United Arab Emirates' Dubai Ports World to transfer its US operation to a US entity should not come as a surprise. As the company statement reads, it was done in the interest of preserving the ''strong relationship between the UAE and the United States.'' That's what allies do.

Some people are comfortable with the notion that we can rely upon our traditional allies in NATO and elsewhere around the world — ''people more like us'' — to deal with a terrorist problem that threatens all civilized countries. The reality is we are far more likely to find the critical help we need in Dubai or Jakarta than Stockholm or Paris.

The recent visit of Secretary of State Condoleezza Rice to the UAE reinforced the Bush administration's understanding of the richness of US-UAE cooperation in a variety of security-related fields. The list is long -- from port and airfield support for US Navy warships and Air Force assets covering the Afghanistan and Iraq theaters to assistance in combating money laundering. Rice called the UAE a ``good partner in the war on terrorism, a stalwart partner.''

Before 9/11, regulations for the Dubai money markets had many holes. During my tenure as US ambassador to the UAE in the late 1980s, there was potential for strategic cooperation, but much still needed to be done to make it a reality. That has changed.

Today, the US Treasury Department holds up the UAE as a model for other countries to emulate. As for customs enforcement, the authorities in Dubai host US customs agents, providing us an unparalleled ability to inspect suspicious containers before they arrive in US ports. This is another model we hope other countries will adopt, since all the efforts we make at US ports of entry may be too late.

At this point we should start thinking about what we would lose if we were perceived as treating their cooperation with patronizing contempt. The UAE government and private sector leaders I talked to were too polite to hint at retaliation, but we cannot ignore the possibility.

Furor Over Prospective Deal

During my recent visits to Dubai and Abu Dhabi, both US and senior Emiri officials briefed me on the ways the UAE is helping us combat terrorism. There is nothing we have asked of the UAE government since September 2001, and we have asked for a lot, that they have not delivered.

The controversy over the ports deal landed with the thud of a misdirected bomb. The impression was that we had hung out a sign saying, ''Help wanted in the war on terrorism. Arabs need not apply.'' Reluctantly, I had to tell the Emiris that in the current Washington environment, if you put three words together — money, Arabs, and Bush — you guarantee a political firestorm.

They are amazed that US domestic politics could have such a powerful effect on responsible members of Congress. And, they wonder if the facts would make any difference. The furor over the prospective deal with Dubai Ports World also provides some lessons on the reality of US reliance on foreign capital and our double standards on foreign investments. At a time when the Bush administration is pursuing a free trade agreement with the UAE and other Arab markets to open the door for US companies, we are shutting the door to foreign investors at home, using national security as a smoke screen.

Foreign investment in our ports should not be confused with security. Our government, not the terminal managers, always will have the chief responsibility to guarantee port terminal security.

Dispel the Myths

On recent trips to the region, I found much interest in investing in this country. But nervousness over the potential political backlash is causing businessmen to explore other options.

We can use all the foreign capital we can get to help reduce our $700 billion global trade deficit. And we can certainly benefit from the international security support and political goodwill that comes with increasing international commercial cooperation.

It is time to dispel the myths about Arab investment that stir up anxieties and negative attitudes toward our trade partners. Increasing our international commercial cooperation not only provides economic benefits but also strengthens support in the Global War on Terror. The UAE government has acted more quickly and firmly than most in the region. Regardless of how the DP World affair plays out, now is not the time to turn our backs on our friends.

Reneging on the Port Deal would be a Blow to US Interests

Edward Walker — Mon, 27 Feb 2006 12:00:00 -0500

The sudden outcry by some members of Congress, state and local officials, and pundits about the United Arab Emirates port deal has the odor of election-year politics. I see a lot of statements that ignore the facts and are designed to play on the fears of the American public. The facts do not support the political rhetoric about security.

If our ports are indeed vulnerable, that vulnerability has nothing to do with the companies that manage them. Port security is regulated by the Department of Homeland Security, US Customs, the Coast Guard, and border protection authorities, not by private contractors. Port employees must be American citizens or legal permanent residents. No private company will own or manage any of our ports — the UAE company, Dubai Ports World, would only manage and operate terminals within the port.

More to the point, by the time a container has entered one of our ports and been off-loaded for further processing, it is probably too late to avert a nuclear or biological attack. Ports are located in major metropolitan areas where the effects of such an attack, even if centered in the port area, would have devastating consequences. The Container Security Initiative is the critical piece in the port security puzzle.

The UAE was the first Middle Eastern state to join this US-sponsored initiative. Under its provisions, customs and border protection officers are permanently located in UAE ports to inspect containers before shipment to the United States. The UAE was also the first Middle Eastern state to join the Energy Department's Megaports Initiative, designed to stop illicit shipments of nuclear and other radioactive material. In short, we already depend on the cooperation of the UAE and its management company to ensure the security of US ports, regardless of this proposed contract.

In more general terms, the UAE has been a key ally in the fight against Saddam Hussein, both in 1991 when I was the US Ambassador to the UAE, and more recently in support of our efforts in Iraq. Since 1990, the UAE has entertained more port visits by US naval vessels than any other nation. In the war period of 1990-91 alone, more than 300,000 American sailors were able to take liberty in the UAE (and all on the basis of a handshake between the UAE ruler, Sheik Zayed, and myself). We had multiple squadrons of fighter, tanker, and reconnaissance aircraft stationed at UAE airports. Today our planes are able to use UAE facilities and we work together at the UAE Air Warfare Center, where our pilots are able to train.

Like the United States and most countries in the Middle East, the UAE was asleep at the switch when it came to al Qaeda prior to September 11, 2001. But since that time we have had outstanding cooperation on curtailing terrorist financial operations. Working with the Treasury Department, the UAE has enacted aggressive anti-money laundering and counter-terrorist financing laws. Information exchange between intelligence and financial authorities is continuous and far-reaching.

When our politicians ignore these facts and challenge the UAE's support for American interests, it looks more like racial profiling and political grandstanding than honest concern about US security. The fact that a few UAE citizens have joined al Qaeda is not a reason to condemn an entire country, just as we cannot and should not take the blame for the actions of every US citizen.

The fact that the UAE was the site of financial transactions supporting terrorist organizations before 9/11 is no more relevant today than the fact that the US supported the Taliban against the Soviets in Afghanistan or that American citizens financially supported terrorist organizations before systematic reforms we put in place after 9/11.

Members of Congress need to consider carefully the impact of reneging on this contract. Identifying the UAE as complicit in terrorism will sour a relationship that has been essential for our forces in the region and the continued safety and well-being of our troops. It will also anger the population of the UAE and put pressure on the government to terminate or limit UAE cooperation with the United States.

It may also put our ports in greater jeopardy if the UAE becomes less rigorous or less cooperative in the Container Security and Megaports Initiatives. We will be no safer and possibly a good deal less safe. Let us hope that we do not jeopardize our relations with a country that is a key player in the war against terror just to score a few points against the President and his administration.

A Roadmap for North Africa

Jacques Roussellier — Thu, 15 Dec 2005 12:00:00 -0500

What was intended as a meeting of European and Arab leaders in Spain recently turned out to be mostly empty seats. It is a potent reminder of how wide the gap remains between the two sides of the Mediterranean.

As the still simmering French riots and Dutch uneasiness remind us, even the most secularized countries in Europe are struggling to make sense of their own national identity in the face of mounting Islamism and the threat of terrorism among their own citizens of Muslim and Arab origin.

Though heralded as one of the finest hours of European foreign policy, the Brussels approach to the Maghreb and the Middle East is nonetheless the pursuit of narrow continental interests. Beyond a difference in tone between its soft stand, largely driven by economic development, migration, and rule of law, and Washington’s hard line efforts in the region, which are mainly driven by military and counter-terrorism concerns, the Brussels approach crucially misses the opportunity to foster economic development and long-term stability in North Africa.

There is much to gain from a joint effort to spur investment and create a common market in the region. According to a study by the International Monetary Fund, a regional market in North Africa will increase foreign direct investment by 62% in Algeria, 85% in Morocco and 165% in Tunisia.

But the North African countries’ failure to establish a regional free trade area — due to long-standing disputes, such as the status of Western Sahara, and hegemonic ambitions, particularly Morocco versus Algeria — is an issue that should have been addressed squarely and jointly by the European Union (EU) and the US. Besides fostering economic growth to help secure strategic objectives, the US and EU’s respective free trade accords reveal a striking lack of transatlantic convergence. The United States and European Union could have more effectively encouraged the resolution of regional problems by linking progress to economic incentives. Joint US-EU pressure could have been used to make the removal of regional obstacles a pre-condition for signing trade agreements with North Africa. Normalization of relations with Libya is also a case in point.

Morocco, for example, is the biggest recipient of EU aid and is a favorite of US support. The government signed separate trade agreements recently with the US and the EU, which could have been used as strategic leverage to pressure Morocco to seek more actively a resolution of the Western Sahara dispute.

Efforts to set up a regional free trade area would also exclude Algeria and Libya. Yet both states are strong candidates for future growth in oil production. Keeping them within a regional free trade area would enhance energy security for both Europe and the United States, especially their international oil firms.

Without North Africans doing their homework and the correct and coherent signals coming from across the Mediterranean and the Atlantic, the old asymmetric game continues: North African states wishing for bilateral security guarantees get soft security piecemeal handouts, which is unlikely to create a stable Mediterranean basin. Without economic growth based on regional and international trade, there is still the twin curse of a failed economic and political model that renders conservative regimes from Morocco to Jordan more prone to terrorist recruits and suicide attacks.

The primary step in securing growth and countering the spread of terrorism needs to be coordinated policies between Washington and Brussels. Common long-term interests in security and development in the region are far more important than short-term gains in strengthening ties with key regional allies that only play into the hands of hegemonic agendas.

Furthermore, a common declaration on stability and security in the Maghreb should clarify what would be required from both sides in terms of settling regional disputes and promoting cooperation.

Finally, a regional security dialogue — a permanent organization for North Africa with perhaps the Sahel countries — should assist the implementation of regional and bilateral accords and provide a forum to resolve disputes and organize security cooperation in counter-terrorism efforts.

Free trade and economic growth in North Africa would not only provide stability in a strategically significant and volatile region, but would also contribute to a much needed security and economic buffer, as well act as a bridge between a desperately poor sub-Saharan Africa and an inward-looking Europe.

American Economic Assistance Program to Egypt

Ambassador Edward S. Walker, Jr., President, Middle East Institute — Thu, 17 Jun 2004 12:00:00 -0400

Mr. Chairman, Members of the Committee, Ladies and Gentlemen, I welcome the Committee’s efforts to review our economic assistance program, as administered by the Agency for International Development (AID) in Egypt and to consider its objectives and effectiveness.

Overall, the United States has invested about $25.5 billion in Egypt’s economy. Since 2000, by agreement with Egypt, the program has been reduced by about $40 million each year so that in FY 2003 funding was at $615 million. It will level off at $407.5 million by 2009. The figures, however, do not tell the whole story. For our assistance program was already declining significantly over the years due to inflation. If we wanted to maintain our program at the level of the 1979 outlay of $1.1 billion, adjusting for inflation over the years, our outlay today would be around $4.5 billion.

The point here is that the impact of our AID dollars has been substantially reduced and our leverage to encourage economic, political and social reforms equally reduced. I raise this because there is a danger of expecting too much of our AID program. I also raise it because our resources have declined, so if influence and reform are our objectives, then logic would indicate that the scope of our programs should have contracted as well – in short, we should have narrowed our focus so that our remaining programs would be larger and have greater impact.

In fact, until the most recent USAID/Egypt program review called for by the House Committee on Appropriations, which stressed greater focus of our program, AID was continuing to cover seven strategic objectives relating to major sectors of the Egyptian economy and society. Since our program incorporates a five-year strategic planning cycle, by the end of the five years in 2008, we would be stretching a program of $415 million to cover the seven strategic objectives.

We need to have a better concept of what we are trying to do and what we can possibly do with the resources at hand. Frankly, I don’t know what the US objective is. Are we trying to alleviate poverty? Are we trying to build the middle class? Are we fostering upward mobility? When I look at the AID program I see a Chinese Menu – a little of this and a little of that. I don’t see a focused program and I surely don’t see priorities that could make a substantial difference.

Today, we need to see our AID program in a broader policy context. No matter how much money the AID Director can conceivably have available in today’s budget climate, he or she cannot change the pace or direction of reform except at the margins. What set aside the period of the mid nineties, when I was Ambassador in Egypt, and when reform, by all accounts, was in its heyday in Egypt, was the commitment at the very top of the Administration to reform. If we are serious about reform and if we really mean it when we call for democracy and economic and social change, then we cannot leave the problem to our AID Directors or our Ambassadors or Assistant Secretaries. It will take genuine commitment and persistence from the President and the Vice President, as well as from the Congress.

There are two other aspects of the AID program in Egypt that deserve close scrutiny. The program as it is structured devotes about 30% of its funds, or $200 million to the Development Support Program (DSP) which is a cash grant in return for meeting negotiated reform targets. A second $200 million is directed to the Commodity Import Program. That leaves about $200 million for all other programs combined. The DSP grants, although a good idea, have some inherent weaknesses. One weakness was pointed out by the Program Review – that the reforms negotiated with the Egyptians covered a wide gamut of issues and thus lost focus. The Review recommended focus on “one or two key economic reform areas.” A second proposal by the Review suggests that if outcomes agreed with Egypt for negotiated reforms are not met, then the funds should be reprogrammed to fund other USAID projects in Egypt.

Both of these proposals have met resistance by the Government of Egypt. And that raises an important question as to whether or not Egypt is operating under a US entitlement, or should the program be linked to US interests and objectives. If the cash transfer is earmarked and obligated, as currently is the case, and cannot be reprogrammed then our Ambassador and AID Director have limited leverage in both program design and implementation. In short, whose money is it? The AID Review proposal to permit reprogramming such funds to other AID projects in Egypt would go part of the way toward resolving this problem, but AID might also want to look at authority to reprogram such funds to other AID programs in the Middle East as well.

While I was in Egypt, I was a strong advocate of the Commodity Import Program. It is a seductive program in that it supports US business sales to Egypt, establishes supplier relationship with US companies, and then lets us use the money twice – once for Egyptian firms to buy the products using low cost short term loans from AID funds and then again by the Government of Egypt once those loans are paid back. It is a popular program in Egypt and in the United States with its beneficiaries. The Program Review suggests downsizing it to $150 million by 2009 and this makes sense. However, AID needs to take a hard look at the program, whom it benefits, and the controls over the Government of Egypt’s use of the proceeds.

In this case the money does already belong to the Egyptian Government. One problem with this is that US objectives are no longer the guiding principal in the allocation process. In addition, the loans provided to Egyptian businessmen tend to be driven more by sales of American products than by AID’s reform agenda, not a bad thing, but not a recognized purpose of the AID program. AID needs to take a hard look at how this program might be restructured to direct it more closely to AID’s objectives.

In conclusion, I believe that the AID Review has moved the program in the right direction but there is further work to do. And part of this work will have to be driven by Congress. Our objective should be a tighter more tailored program which takes account of limited resources. It should not be considered an entitlement, nor should it be seen as a mechanism for enforcing reform. Egypt has to take ownership of its own reform program, but we need to continue to stimulate that process.

Trade as a Lever for Reforms in the Arab World

David L. Mack — Thu, 11 Mar 2004 12:00:00 -0500

Trade and Investment Treaties, Free Trade Agreements and similar instruments prod governments in the Middle East and North Africa to adopt economic reforms. Such measures strengthen the private sector and lead to greater transparency and rule of the law. This includes regulations that enforce measures against international crime, such as money laundering.

Given the proper incentives, the private sector can provide jobs and hope to the young men and women whose families have invested in their education. Without constructive outlets, the emerging generation will be fodder for elements that foment hate and violence.

My perspective is based on over 40 years dealing with this region as a US diplomat, a private business consultant and educator. Despite promising exceptions, many of the Arab countries and Iran still have stagnating economies. Ties between government elites and a relatively few family commercial empires tend to dominate economic activity and hamper the emergence of competition.

It is commonplace to describe Arab political economies as being subject to over regulation. Certainly this is one of the primary problems in a country like Egypt. But we also need to acknowledge the problem of under regulation in many of the newer states of the Gulf.

As Ambassador to the United Arab Emirates starting in 1986, I found the UAE’s small but lucrative markets filled to overflowing with fraudulent copies of brand name consumer goods, ranging from automobile parts to music cassettes. Federal institutions in this area were weak to non-existent. Rule of law, sanctity of contracts and transparency were at best unpredictable. Patents, trademarks, and copyrights had very limited protection. In effect, the UAE was becoming a pirate’s cove with no meaningful intellectual property protections.

We offered negotiated agreements to avoid retaliation. Senior officials from the federal ministries received a thorough briefing on the realities of the US political and economic environments that could lead to trade sanctions. Our negotiations encouraged the UAE to take pride in meeting high standards. Now the UAE is an increasingly valued commercial partner. We will sign a Trade and Investment Framework Agreement next week.

In 1993, the Departments of State and Commerce launched the first of what became annual economic dialogues with the six states of the Arab Gulf Cooperation Council. It was clear that the dominant oil and gas sectors of those economies were not creating jobs at anything close to the pace required to absorb the increasing numbers of graduates. Our intention was to inject new life into US relations with our Arab Gulf political and economic partners by encouraging economic and regulatory reforms.

Results of this first annual dialogue were disappointing. Both sides made resounding affirmations of shared interests but showed a lack of serious self-examination. Many speakers from the region were long on assertions of opportunity for US firms but avoided commitments to the kind of reforms we suggested were necessary. The US made no commitments about what we might be prepared to do in response. A chilly silence met my cautious call for gradual and orderly political reforms, even though I knew that I was partly echoing the views of businessmen and intellectuals from the region.

In the years that have followed, the Arab business communities have become more vocal in expressing the need for economic reforms. They know this is the price for entry into the global economy, either as members of the World Trade Organization or as partners with the United States in bilateral agreements. They understand that the discipline this provides may be a necessary catalyst for internal change. There is fear that change will upset a familiar cultural order. But Arab business elites fear even more the social and political consequences of inaction. Various political leaders have now joined the more dynamic members of the business community to call for reform, including more relevant education.

From the US perspective, trade negotiations are a businesslike and non-sanctimonious way for us to promote positive change. Arab governments and business establishments see the connection between economic and social reform and their long-term security. They know this has implications for the traditional political order, although commitment to change in that regard is very cautious. It requires the vision to take risks and make uncomfortable adjustments. Resistance to high profile US pressure for political reforms is almost certain. The prospect for political reform requires its emergence as an authentic expression of local aspirations.

Appreciation Lunch for Sec. Spencer Abraham

Spencer Abraham — Wed, 29 Sep 2004 12:00:00 -0400

MEI is proud to join the National US-Arab Chamber of Commerce (NUSACC) in co-sponsoring an Appreciation Lunch for US Secretary of Energy Spencer Abraham.

Secretary Abraham is expected to address an array of issues, including: US energy security, US relations with the Arab world (including commercial ties), and the increasing importance of liquefied natural gas (LNG) to the United States.

The Honorable Spencer Abraham assumed office as US Secretary of Energy on January 20, 2001, following service as a US senator from Michigan (1995-2001). Before his election to the Senate, Abraham served as co-chairman of the National Republican Congressional Committee (NRCC) from 1991 to 1993. For more biographical details, please click here for his USDOE bio and click here for his White House bio.

NB:

Special Thanks to David Hamod, President, National US-Arab Chamber of Commerce

Off-Record Rountable

Edward "Skip" Gnehm — Mon, 26 Jul 2004 10:30:00 -0400

The Honorable Edward "Skip" Gnehm, outgoing US ambassador to the Hashemite Kingdom of Jordan, will share his observations around an intimate table after three years of service there. US-Jordanian trade, Iraqi reconstruction, and the FTA among other matters.

Sponsors: MEI joins the National U.S.-Arab Chamber of Commerce in sponsoring this event.

"Dubai & Co.: Global Strategies for Doing Business in the Gulf States"

Aamir A. RehmanAamir A. Rehman — Thu, 11 Sep 2008 09:04:29 -0400

Rehman began by providing an overview of each Gulf country’s economic history, and various factors that have contributed to their growth. Among these are sustained growth and prosperity as a result of two successive oil booms, enormous shifts in demographics, and regulatory reform. He also highlighted his view that the GCC economies are diverse well beyond the energy sector, while the GDP per capita is higher than that of China and India.

On the other hand, Rehman admitted that there are some key factors that are a hindrance to progress. Chief among these is a high unemployment rate (over 10% in half of the GCC), extremely high expatriate populations, and prosperity without the proper institutions to sustain growth.

The corporate strategies that Rehman outlined cover a wide range of factors to consider when doing business in the Gulf. He discussed different strategies: from choosing which level of engagement will best benefit a business based on their own circumstances to customizing marketing strategies to adapt to the local markets.

Finally, Rehman raised the challenges that exist for doing business in the Gulf. Some problems that businesses face are high inflation, the Gulf’s dependency on oil as the main source for income, regulatory issues differing from state to state, and difficulty in executing a startup business in the region. Despite these potential barriers to success, Rehman identified strategies that can make doing business in the Gulf States very attractive.

MEI's 61st Annual Conference - Closing Remarks

H.E. Abdullah AlirezaH.E. Abdullah Alireza — Mon, 26 Nov 2007 11:42:01 -0500

Abdullah Alireza began his address on a positive note, drawing attention to the encouraging developments of the economic sector in the Middle East. He emphasized that in the three decades since his last visit to the National Press Club as a Georgetown student in 1968, the economic trajectory of the Middle East has been significantly altered. The benefits reaped for the Kingdom of Saudi Arabia from the economic boom of the 1990s are considerably different than the economic improvements that were ushered in as a result of the windfall from the 1970’s oil boom.

Alireza highlighted Saudi accession to and participation in the World Trade Organization and underscored that despite the region’s ongoing struggle to position itself favorably in the 21st century, the Middle East is not in a state of perpetual negative flux.

Despite the chaotic backdrop, he contended that the Middle East is experiencing an economic boom and the Gulf Cooperation Council (GCC) is emerging as a strong and stable entity, which along with China, constitutes a $300 billion current account surplus—55 percent of which was invested in the US between 2002-2006. The GCC has also helped link North Africa to the rest of the Arab world; GCC exports have been the drivers of integration, increasing from 5.8 percent to 8.9 percent in the last few years alone. The private sector has also been quite active, demonstrating sustainable progress amid economic diversification.

Mr. Alireza noted that Saudi Arabia is ranked 25th among the world economies and the Kingdom boasts a $700 billion stock market. World Bank data demonstrates that unemployment is declining. He noted that some consultants calculated that Saudi Arabia is able to offer some 600,000 jobs in middle management, with approximately 200,000 Saudis qualified to fill the positions. He said there is $600 billion available for economic investment; much of which could be allotted for various sectors including natural gas, chemicals, tourism, technology, and much more. Saudi Arabia is also seeking greater cooperation between China, India, Brazil and Turkey.

The Saudi advisor said King Abdullah took a another step in 2004 to try to open the way for future economic successes for his nation by delineating the four steps needed for a healthy transition to private sector development: diversification, increasing private sector opportunities, enhancing bureaucratic efficiency and utilizing private sector capital for investment. Another effort has included construction of the King Abdullah University for Science and Technology—the only institution outside of the Jeddah, Riyadh and eastern provinces devoted to research and development. Seventy percent of the members on its board of trustees are non-Saudi. Its president is also President Emeritus of Cornell University. Ideally the university would accommodate some 300,000 graduates.

Notwithstanding these hopeful measures, he said US investment in Saudi Arabia remains highly deficient. Mr. Alireza called for greater western economic involvement and suggested greater use of economic restructuring to alleviate some of the issues plaguing Palestine, Lebanon and Iraq. He also underscored the importance of modernization and development in conflict resolution.
Saudi Arabia, he said, can continue to foster a robust economy well into the future by investing the wealth from its vast oil revenues into technical knowledge and human capital and by promoting institutional collaboration. He emphasized that Adam Smith’s predictions 200 years ago rings true today—that free market economics and capitalism is the key to building a viable and sustainable society.

Abdullah Alireza urged that dialogue replace the chaos and destruction in the region that has colored relations between the West and the Muslim world.