Why Middle East is Looking East

The times, as Bob Dylan would sing, they are a-changin’.That the Middle East is looking East is old news. Pundits have been obsessingabout the shift in the balance of power from the West to the East for yearsnow. You’ve got to be blind to miss the meteoric ascent of China, India andothers over the past decade or two. However, even those watching the rebirth ofAsia hardly seem to realise the phenomenal pace at which it has been happening.

The Middle East isn’t merely looking eastwards, firming tieswith China, India and other emerging players, the Gulf oil and money have beenplaying an increasingly critical role in the Asian resurgence. At the sametime, the Asian powers are more than ever investing their expertise and humanresources in the continuing development across the region.

   

Of course, the frenetic pace of growth and building that hadturned much of the Gulf into a beehive of active and Dubai ‘the crane capitalof the world’ some years ago has been affected by the global slowdown and thesickness 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 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 expandsitself, perpetually pouring out a sea of humanity. And the Gulf finds itself atthe global centre stage. The US and Europe that between themselves control andrun the world economy are still yet to yet to fully recover from the globalslowdown. The continuing unraveling of the European Union is only matched bythe freefall of its once invincible currency.

The West has been bleeding away its centuries-old economicclout and China and other fellow travellers are the beneficiaries. The Gulfstates are reaching out to the East to revive ties that go back thousands ofyears. The Arabs have travelled and traded between the East and West forcenturies.

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

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

There’s also the talk of reviving the pre-First World WarBerlin-Baghdad rail link on the one hand and the old Hejaz rail network thatonce 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 Makkahand Madinah with Riyadh and other major cities in the kingdom, which in turnwould join the Gulf Cooperation Council rail network across the regionincluding the UAE and Oman.

Connecting the dots, wouldn’t you say the world isundergoing a dramatic transformation? The Middle East of course still remainsdependent — perhaps more than the rest of the world — on the US-controlledfinancial system. Most Gulf currencies remain pegged to the almighty dollar,largely because the greenback is the currency in which the world does itsbusiness.

However, the region has started looking beyond itstraditional partners and allies to engage the rising stars of the developingworld. Many from BRIC (Brazil, Russia, India and China) and triple AAA (Asia,Africa and Americas) groups, including Turkey, Brazil, Argentina and SouthAfrica, are part of the new equation. Economic tectonic plates are silentlymoving and possibilities for all concerned are mindboggling and limitless.

The New York Times tried to make sense of the phenomenon ina 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 asthey calibrate a new Middle East-Asia partnership.

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

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

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

The number of Chinese in UAE has crossed around 200,000, notto mention more than 4,000 Chinese firms. It is the same case with other Asianplayers including South Korea, which is involved in nuclear power projects.

However, as the Times puts it, it is oil and natural gasthat form the glue that binds the Gulf-Asia trade. Gulf oil is fuelling thefast-growing Asian economies, just as it fuelled western economies for longyears.

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. Thismay just be the beginning. Booming trade and surging oil revenues are in turnbeing invested back in new business initiatives with Asia. The Middle East isone of the many beneficiaries of the metamorphosis in the global economy.

The world is at a tipping point. After centuries ofdispossession and being used as pawns in the games of world powers, the Araband Muslim nations seem to have a historic opportunity to take charge of theirdestiny. Can the Islamic world turn its riches and growing economic ties withemerging players into a more balanced and mutually respectful strategicpartnership? The oil will not flow forever. While it does, the Arabs need toinvest it in building institutions and infrastructure that will empower theirfuture generations and build a more just world.

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