This just in: General Electric and the government of Abu Dhabi announced an $8 billion joint venture for commercial finance in the Middle East. Through Abu Dhabi's investment arm Mubadala, the emirate will contribute $4 billion and GE the other $4 billion, growing to $40 billion in the coming years, with the aim of supporting various energy and infrastructure projects in the region, including an aggressive plan to sponsor green, clean and sustainable water and energy plants. As part of that, the fund will support several projects in Abu Dhabi's Masdar City, a utopian project to build a carbon-neutral city in the desert.
With Obama in the Arab heartland this week (first Iraq, then Jordan) the headlines have focused on foreign policy defined as national security - the future politics of Iraq, troop withdrawals, Palestinian-Israeli peace (or lack thereof). Little has been said in public about the economics of the region, or the position of the United States vis a vis economic development. It would be deeply surprising (and a bit disturbing) if those questions were not discussed in private between Obama and his interlocutors, but while the domestic economy in the United States is a source of constant public debate and a major campaign issue, the economics of the Middle East are at best an afterthought.
But while Iraq, Israel-Palestine, Iran and nuclear weapons are critical security issues of the present, the emerging economic clout of the region is a critical security issue of the future. The influx of money into the Gulf region in particular as a result of sharply higher prices for oil has resulted in a vast wealth transfer from the United States and Europe to the Middle East. The emirates alone already have sovereign wealth funds that control trillions of dollars, and that figure is growing daily. What's more, there is a new determination on the part of the custodians of that wealth to invest it in the region, rather than buying up pleasure palaces on the Costa del Sol as they did in the 1970s during the last oil boom. That investment, both in the region and globally, is reshaping the global economic system.
We are used to viewing the Arab world (which just to be clear does not include Iran) as a source of political and religious crisis, but the challenge ahead is to recognize the economic implications. Businesses like GE have already seized on the Gulf as a new area for growth, as have rather desperate Wall Street institutions that have been setting up shop in Dubai and turning that emirate into a next center of global finance. Any incoming US administration will have to consider the implications of the wealth transfer, of the fact that the United States is increasingly turning to the Gulf not just for oil but for capital and for much-needed help financing our debts - and of course, to buy the Chrysler Building. This may be the worst thing in the world, or the best, but whatever one thinks of it morally, it simply is. Ignoring it, decrying it, hoping it will go away, those aren't viable options. Yes, the Arabs are coming, and they are loaded, with dollars.