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April 19, 2019

Between Asia and the Gulf


April 19, 2019

The times, as Bob Dylan would sing, they are a-changin’. That the Middle East is looking East is old news. Pundits have been obsessing about the shift in the balance of power from the West to the East for years now.

You’ve got to be blind to miss the meteoric ascent of China, India and others over the past decade or two. However, even those watching the rebirth of Asia hardly seem to realise the phenomenal pace at which it has been happening.

The Middle East isn’t merely looking eastward, firming ties with China, India and other emerging players, Gulf oil and money have been playing an increasingly critical role in the Asian resurgence. At the same time, the Asian powers are more than ever investing their expertise and human resources in the continuing development across the region.

Of course, the frenetic pace of growth and building that had turned much of the Gulf into a beehive of activity and Dubai ‘the crane capital of the world’ some years ago has been affected by the global slowdown and the sickness that started spreading from the US Wall Street in 2008-9.

Although the Gulf has been quick to recover from the shock and awe of the self-inflicted misery of the world’s largest economy, it is yet to return to the good old times thanks to the unprecedented crash in global oil prices. It is a long way off from the days of bursting coffers when the crude was trading at $100 plus per barrel. The fabled construction boom of Dubai seems to have slowed down with hundreds of completed real-estate projects now waiting for customers. Recently, Gulf News reported how potential buyers are being offered myriad attractive options of owning property in the region’s most happening city.

Yet the Dubai airport is busier than ever as it expands itself, perpetually pouring out a sea of humanity. And the Gulf finds itself at the global centre stage. The US and Europe, which between themselves control and run the world economy, are still yet to fully recover from the global slowdown. The continuing unravelling of the European Union is only matched by the freefall of its once invincible currency.

The West has been bleeding away its centuries-old economic clout and China and other fellow travellers are the beneficiaries. The Gulf States are reaching out to the East to revive ties that go back thousands of years. The Arabs have travelled and traded between the East and West for centuries.

The fabled ‘Silk Route’ that connected the Middle East and Asia used to be the main street of the global bazaar. With the arrival of Islam and the Muslim empire straddling three continents and reaching the far corners of the world, it only grew in eminence. Today, those historical ties are being revived in numerous ways as the old world and old power centres crumble and new geopolitical and economic realities take shape. New bridges are being built between the East and the West, quite literally.

China has already taken its relationship with Turkey, once home to a vast Muslim empire and the Islamic caliphate to the next level. One of the many joint projects connecting the two countries is the $35 billion high-speed rail network that connects China with Turkey and beyond with Europe as far as Britain and Spain, besides many central Asian states along the way.

There’s also talk of reviving the pre-First World War Berlin-Baghdad rail link on the one hand and the old Hejaz rail network that once connected Turkey with the holy cities of Makkah and Medina on the other. Saudi Arabia has been working on the giant railway network that will connect Makkah and Medina with Riyadh and other major cities in the kingdom, which in turn would join the Gulf Cooperation Council rail network across the region, including the UAE and Oman.

Connecting the dots, wouldn’t you say the world is undergoing a dramatic transformation? The Middle East of course still remains dependent – perhaps more than the rest of the world – on the US-controlled financial system. Most Gulf currencies remain pegged to the almighty dollar, largely because the greenback is the currency in which the world does its business.

However, the region has started looking beyond its traditional partners and allies to engage the rising stars of the developing world. Many from Bric (Brazil, Russia, India and China) and triple AAA (Asia, Africa and Americas) groups, including Turkey, Brazil, Argentina and South Africa, are part of the new equation. Economic tectonic plates are silently moving and possibilities for all concerned are mindboggling and limitless.

‘The New York Times’ tried to make sense of the phenomenon in a report titled, ‘A modern Silk Road between Asia and the Middle East’, detailing projects and ventures involving hundreds of billions of dollars. Hundreds of Asian investment bankers and experts have been moving to Dubai as they calibrate a new Middle East-Asia partnership.

“Traders centuries ago brought silks and other goods from China by land along caravan trails and sea passages plied by sailing dhows. As the West waxed in wealth and China waned, the old routes waned with it. But now the pendulum is swinging back and the Middle East, especially the Gulf, is again growing much closer to Asia”, reported the Times.

In the past decade and a half, the trade between the Gulf and Asia, including India and China, has registered more than a 1000 percent growth and more than half of the region’s trade is now with Asia. This week, Reuters reported that Saudi Aramco is eyeing a 25 percent stake in Mukesh Ambani’s Reliance Industries, specifically in its refining and petrochemical business.

Now you have some idea why the Arab states have lately been growing close to Modi’s India. In the end, it all comes down to business. The ever-enterprising UAE is trying to make the most of the new trend as it presents itself as the new global hub and caravanserai between the Middle East and Asia.

The number of Chinese in the UAE has crossed around 200,000, not to mention more than 4,000 Chinese firms. It is the same case with other Asian players including South Korea, which is involved in nuclear power projects.

However, as the Times puts it, it is oil and natural gas that form the glue that binds the Gulf-Asia trade. Gulf oil is fuelling the fast-growing Asian economies, just as it fuelled Western economies for so many years.

Today, much of the Saudi crude exports go to the Far East, instead of the United States and Europe, as had been the case in the past. This may just be the beginning. Booming trade and surging oil revenues are in turn being invested back in new business initiatives with Asia. The Middle East is one of the many beneficiaries of the metamorphosis in the global economy.

The world is at a tipping point. After centuries of dispossession and being used as pawns in the games of world powers, the Arab and Muslim nations seem to have an historic opportunity to take charge of their destiny. Can the Islamic world turn its riches and growing economic ties with emerging players into a more balanced and mutually respectful strategic partnership?

The oil will not flow forever. While it does, the Arabs need to invest it in building institutions and infrastructure that will empower their future generations and build a more just world.

The writer is an independent writer and former editor.

Email: [email protected]

Twitter: @AijazZaka

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