Archive for the ‘Industrial investment’ Category

In a commentary posted on the TradeFlow21 website in advance of President Obama’s speech, we wrote that necessity:

1)      demands the cessation of hostilities between Israel and its neighbors, including the creation of a sovereign Palestinian state as the only viable means of resolving the Palestinian question

2)      requires a U.S. policy that summarily rejects those in all quarters who use division and discord as a means of maintaining their “competitive advantage” in the region

3)      dictates that economic development, through investment and trade, be embraced as the preferred path to establishing a more stable, secure world for all

In his long-awaited speech on American-Muslim relations today in Cairo, President Obama responded, arguing that

1)      “America will not turn our backs on the legitimate Palestinian aspiration for dignity, opportunity and a state of their own”

2)      “as long as our relationship is defined by our differences, we will empower those who sow hatred rather than peace…conflict rather than cooperation…this cycle of suspicion and discord must end”

3)      “on economic development, we will create a new corps of business volunteers to partner with counterparts in Muslim-majority countries…I will host a summit on entrepreneurship this year to identify how we can deepen ties between business leaders, foundations and social entrepreneurs in the United States and Muslim communities around the world”

Thank you, Mr. President.  The partners of TradeFlow21 will join you in the cause to build a prosperous, secure Middle East through commerce and trade.  Let us now begin our work.

When President Barack Obama delivers his address tomorrow in Cairo to the wider Muslim world, he will do so at great political risk to himself and his administration.  But it is a risk that demonstrates the political courage of a first-term president who acts out of necessity, and not expediency.

Necessity demands the cessation of hostilities between Israel and its neighbors, including the creation of a sovereign Palestinian state as the only viable means of resolving the Palestinian question.

Necessity now requires a U.S. policy that summarily rejects those in all quarters who use division and discord as a means of maintaining their “competitive advantage” in the region.

Necessity dictates that economic development, through investment and trade, be embraced as the preferred path to establishing a more stable, secure world for all.

For over 60 years, the Middle East, which is comprised of over 20 nations spanning Northern Africa in the west to Southern Asia in the east, has been defined by conflict and oil. This is a new era. Real GDP non-oil growth in the region, which is projected to expand by more than 3.5 percent this year, suggests that Middle Eastern nations are actively pursuing commercial diversification as they seek to become full partners and competitors in the global economy. It also presents tremendous export opportunities for companies who want access to an emerging market of 500 million consumers.

The world is waiting for President Obama to signal a new turn in U.S. – Middle East relations where strategic alliances are built principally on commerce and trade. The partners of TradeFlow21 welcome such a change as both vital and necessary.

If not for U.S. Treasury Secretary Geithner’s latest toxic asset rescue plan — which actually finally tickled the stock market — Abu Dhabi’s Aabar Investments’ $2.66B (9.1% stake) investment in Daimler AG would have been the headline of the day. Instead of “cash for trash,” Aabar and Daimler are investing in R&D in fuel-saving technology. Aabar is now Daimler’s leading shareholder ahead of the Kuwait Investment Authority (6.9%).

Bloomberg reports that Aabar has already transferred the money. Although dilutive, Daimler shores up its balance sheet. Meanwhile, along with return on its capital investment, Abu Dhabi is striving to learn from Daimler’s expertise as it aims to develop its own cleaner energy technologies. Gulf region sovereign wealth has perhaps wisely sat on the sidelines in recent months as it concerns casting more capital at Western banks, but let’s not forget there was also a sizable investment in chipmaker AMD by Abu Dhabi last October.

In his first address to a joint session of Congress on Tuesday night, President Obama committed to work with G-20 nations to “restore confidence in our financial system, avoid the possibility of escalating protectionism, and spur demand for American goods in markets across the globe.” This was certainly good news for Dubai World, which recently invested $400 million to construct east Africa’s ”most modern, highest capacity container port” in Djibouti. The Doraleh Container Terminal is expected to serve the undeserved and expanding markets of east Africa, including Kenya, Tanzania, and Ethiopia. Its strategic location will permit products to flow more efficiently from all corners of the earth, creating a new Middle East-Africa corridor of trade and opportunity.

The Emirate of Dubai will receive a $10bn loan from the UAE central bank as part of its debt restructuring program the Financial Times reported Sunday. The Dubai real estate sector, which has been a primary driver of regional development over the past half decade, has seen prices fall by at least 25 percent between the third and fourth quarters of last year. The loan, part of a wider $20bn bond restructuring program, is expected to restore a measure of confidence in the Emirate as it seeks to create a more diversified services-based economy. For now, the cranes over Dubai are largely idle, though some may argue their silence should be viewed as a welcome pause in development, and not a calamity.

We are traders all. We barter and bargain, agree then rescind, resume and conclude negotiations for goods and services throughout our lives. We trade because we are inclined by nature to do so, regardless of how we earn our daily bread as defined by the color of our collar, blue or white. It is in our blood.

Next January, President-Elect Barack Obama will be severely tested on many fronts:  a two-theater war; dislocation of global markets; and a mounting environmental crisis that threatens to alter the face of the earth and the security of nations. He will be pressed for answers, not just explanations.

For many, the Middle East is the nexus of terror, provoking wars of intervention, and oil, which has created untold wealth for the region and pollution as a by-product of a fuel-addicted world. It is also a land of over 300 million people, where industry, entrepreneurship, and direct foreign investment have fed a development boom of unprecedented scale. Though Gulf states in particular have felt the effects of the current financial crisis, resulting in plummeting home prices in Dubai and the court-ordered closure of the Kuwait stock exchange, the Middle East’s influence in world markets is uncontested.

We urge the President-Elect to seize the moment and let trade flow freely into this intersection of the world, supplanting terror and war by transforming oil-dependent economies into highly diverse, fully integrated drivers of global growth and opportunity.

Let trade also rebalance a troubled region that for the past 60 years has employed a Cold War model with Israel as the sole arbiter of U.S. and Western interests.

Let trade transcend language, culture, and faith as democracies and theocracies find concord through commerce, with prosperity and security the dividends.

With $1 billion in hand, the government-sponsored Abu Dhabi Media Company announced plans to produce eight feature films over the next five years.  Abu Dhabi’s move into filmmaking is seen as an attempt to unseat sister city, Dubai, as a media hub and to establish itself as a “center for content creation.”  See article in Financial Times on Abu Dhabi takes fortunes to Hollywood.

With undetermined reserves of precious metals, including gold, copper, phosphate, and bauxite, Saudia Arabia may soon rival the output of global producers such as Canada and Australia.  In addition to oil, mineral wealth will undoubtedly accellerate Saudi’s drive to diversify their economy, as evidenced by the government’s planned construction of four new cities.  For more, see article in CNN Money/Fortune Magazine.

Investors from Europe and the US seeking to increase their exposure in the Gulf region helped boost sales of Islamic bonds to $17 billion at the end of June, representing a 17 perecent increase over the previous year.  Fueled by soaring oil prices, the cash rich region is seen by many as a low-risk alternative to the credit-stressed markets of the West.  See article in Financial Times (7/22).

General Electric’s (NYSE: GE) Energy division announced over $1.5B in deals between Friday, June 6 and Monday, June 9. The first deal was a contract signed with Iraq for $480M to build three power plants and includes two other contracts each worth $41M for supplying of spare parts. The Monday announcement was for a nearly $1B contract GE won to supply Algeria with gas turbines for power stations.