As economic centre shifts from the West to the East, a new Middle East-Asia economic partnership is all set to change the world, observes AIJAZ ZAKA SYED.
That the Middle East, with the rest of the world, is looking East is old news. Pundits have been obsessing about the coming shift in balance of power from the West to the East for years now. You’ve got to be blind to miss the ascent of China, India, South Korea, Malaysia and others over the past decade or so.
But even those watching this rebirth of Asia do not seem to realise the pace at which it’s taking place. The Middle East isn’t merely looking eastwards and firming its relations with China, India and other emerging players, both Gulf oil and money are playing a crucial role in the resurgence of Asia.
On the other hand, China, India, South Korea and Japan are investing their expertise and human resources in the continuing development and expansion across the Gulf.
Of course, the frenetic pace of growth and building that had turned much of the Gulf into a buzzing beehive and Dubai the crane capital of the world was slowed down by the sickness that spread from the Wall Street. However, the region has been quick to recover from the shock and awe of the self inflicted misery of the world’s largest economy. You do not see that many cranes any more in Dubai but it’s evidently back in the business.
The Dubai airport is busier than ever as it constantly expands itself, perpetually pouring out a sea of humanity. And the Gulf region finds itself at the global centre-stage and in the thick of action. The US and Europe that between themselves control and run the world economy are still reeling from the 2008 bloodbath. The unravelling of the European Union is only matched by the freefall of its once invincible currency. One mighty EU economy after another collapses like a house of cards.
Even as this happens, a slow but decisive shift from the West to the East is taking place. The West has been bleeding away its centuries-old economic clout and China and other fellow travellers appear to be the beneficiaries.
The Arabs, African and Muslim states are reaching out to China and the extended neighbourhood to revive ties that go back thousands of years. The Arab traders have travelled and traded between the East and West for thousands of years both on land and water.
The fabled Silk Road that connected the Middle East and parts of Europe with Asia used to be the main street of the global bazaar and jugular vein of the world economy. The trade route flourished even more with the arrival of Islam and Muslim rule stretching to far corners of the world.
Today, those historic ties are being revived in a myriad of ways as old power centres crumble and new geopolitical and economic realities take shape. Bridges are being built between the East and West, literally.
Turkey’s inimitable Recep Erdogan was in Beijing last month to take an already close relationship to the next level. One of the many Turkey-China projects fast taking shape is a $35 billion high-speed rail network that will connect China with Turkey and beyond – with Europe as far as Britain and Spain, besides many central Asian states on the way.
There are also efforts to revive the pre-World War I Berlin-Baghdad rail link on the one hand and the old Hejaz rail network that once connected Turkey with the holy cities of Islam in a different avatar on the other. Saudi Arabia has been working on the massive railway network that will connect the holy cities of Makkah and Medina with Riyadh and other major cities in the kingdom, which in turn would later join the GCC rail network.
Connecting the dots, wouldn’t you say the world is indeed 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 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 East. 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.
Incidentally, the 2012 IMF Outlook projected positive growth for these regions while it warned of negative growth in most European economies. Economic tectonic plates are moving and possibilities are endless.
The New York Times tried to make sense of the phenomenon in a ‘special report’ this week. The Dubai-datelined report headlined, ‘A modern Silk Road between Asia and the Middle East,’ talks of projects and joint ventures worth hundreds of billions of dollars that have Gulf states working with Asian nations. No wonder hundreds of Asian investment bankers and technical experts have taken residence in Dubai as they calibrate a new Middle East-Asia partnership.
“Traders centuries ago brought silks and other goods from China by overland 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,” reports the Times.
In the past decade alone, Gulf-Asia trade has grown 700 percent and more than half of the region’s trade is now with Asia. Clearly, Asia is where the action is. The ever enterprising Dubai 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 Dubai has shot up to 150,000, not to mention 2000 Chinese firms. Same is the case with other Asian players including South Korea, which is building four nuclear reactors for the UAE at a cost of $30 billion dollars.
But, as the NYT puts it, it is oil and natural gas from Saudi Arabia, Qatar, Kuwait, UAE (and Iran) that are the glue that binds the Gulf-Asia trade. The Gulf oil is fuelling the fast-growing Asian economies, just as it has fuelled the US and European economies all these years.
Last year, 55pc of Saudi crude exports went to the Far East against 16pc for the US and just 4pc for Europe. Shape of things to come? It’s estimated that oil exports this year could earn $750 billion for Gulf oil producers, thanks to the growing global demand and high prices. Booming trade and surging oil revenues are in turn being invested back in new business initiatives with Asian powers. As HSBC’s Simon Williams puts it, the Gulf is the beneficiary of the restructuring of the world economy and Asian growth.
The world is at tipping point. After centuries of exploitation and being used as pawns in the hands of world powers, the Arab and Muslim nations, like other long colonized and exploited people elsewhere, have a historic opportunity to take charge of their destiny in real sense. They have got nothing but injustice, humiliation and a raw deal for their long years of friendship and alliance with you know who.
It’s time to cut this crippling dependence and endless cycle of exploitation. The Arabs must turn their riches and growing economic relations with emerging players into a more balanced, mutually respectful strategic partnership. The oil will not flow forever. While it does, they must invest it into building institutions and infrastructure that will free and secure their future generations and create a better and more just world.
[Aijaz Zaka Syed is a Gulf based commentator. Write him at firstname.lastname@example.org]