28 January 2010

* Gulf Gap in Davos Belies Booming Economies in Oil-Rich Saudi Arabia, Qatar

By Henry Meyer and Arif Sharif Jan. 28 (Bloomberg) — The program for this year’s World Economic Forum in Davos features no speakers from Qatar, Dubai or Abu Dhabi in any of the conference’s 230 events. Five spots are occupied by Saudis and four by Kuwaitis. “I think the absence of the Middle East is quite conspicuous,” said Ibrahim Dabdoub , chief executive officer of the National Bank of Kuwait, interviewed in the conference center in the Swiss village. “It’s a pity that Gulf involvement is so low.” Especially for anyone looking to make money.
Six weeks after Dubai almost defaulted on $4.1 billion in debt, the region as a whole is set to prosper. Oil prices, which account for 75 percent of the revenue of the six monarchies in the Gulf Cooperation Council , have more than doubled from their February 2009 low of $34 a barrel. Saudi Arabia, Qatar and Abu Dhabi are spending $600 billion by the end of 2013 to build roads, railways and new cities while expanding energy and manufacturing.
The GCC countries are forecast by HSBC Holdings Plc to post an average expansion of 4 percent or more in 2010, after no increase last year. That compares with projected growth of 2.7 percent in the U.S. and 1 percent in the 16-nation euro zone, according to the International Monetary Fund . Serious Opportunities “As a region I think we are on the cusp of some very very serious growth opportunities in the years ahead,” said Arif Naqvi , CEO of Dubai-based Abraaj Capital Ltd., the biggest private-equity company in the GCC, in an interview in Davos. “It is probably higher than in other parts of the world. There is liquidity and there is a desire.” The new spending may benefit Munich-based Siemens AG , Europe’s largest engineer, which said in November it is looking to win more contracts in Saudi Arabia to tap rising demand for power generation. Paris-based Total SA , Europe’s largest oil company, said Nov. 24 it is in talks with Qatar to build a petrochemical cracker, a fuel-processing plant.
Emad Mostaque , a Middle East equity-fund manager in London for Pictet Asset Management Ltd., which oversees more than $100 billion, plans to add to Saudi shares that currently represent a third of his portfolio. Saudi Arabia’s benchmark Tadawul All Share Index jumped 28 percent in 2009, the best-performing of the Gulf markets , followed by Oman. “Saudi Arabia is where we see the most potential,” Mostaque said in a phone interview. He said he recently bought more shares in Riyadh Bank, Riyadh-based Saudi food producer Almarai Co. and Riyadh-based Saudi Basic Industries Corp. , the world’s largest petrochemical producer. Pipes and Building He plans to acquire stock in Jeddah-based Saudi Cement, Riyadh-based pipe manufacturer Saudi Arabian Amiantit Co. and Zamil Industrial Investment Co., a Dammam-based maker of building materials. The kingdom last year announced that it would spend $400 billion on projects including three new railway lines and six new industrial cities over five years. It is the largest stimulus package in the Group of 20 nations as a share of gross domestic product. This year, almost $70 billion will go to roads, railways, airports and other projects, a 16 percent increase over 2009.
Crude prices, which have rebounded to about $75 a barrel, are likely to boost Saudi oil revenue in 2010 to $151.7 billion from $116.7 billion in 2009, according to EFG-Hermes. The Saudi 2010 budget was based on an average oil price assumption of $46 a barrel, according to Riyadh-based Banque Saudi Fransi. New Airport Qatar, which has the world’s third-largest gas reserves, is spending more than $100 billion over three years on projects including a new financial center and an airport. Abu Dhabi, the largest sheikhdom in the United Arab Emirates, is allocating $100 billion to such investments as a $40 billion project to build an island tourism and leisure destination. Abu Dhabi holds 8 percent of the world’s oil reserves. “Oil prices will be a very important driver of confidence in the region,” said Dubai-based Monica Malik , chief Middle East economist at EFG-Hermes, which forecasts an average price of $80 a barrel in 2010. The six Gulf Arab nations in the GCC supply about 20 percent of the world’s oil — two-thirds of that crude output in Saudi Arabia alone. Growth will be slower in the smaller Gulf nations of Oman and Bahrain, which have less oil wealth, and Kuwait, where political infighting is slowing spending programs, said Simon Williams , chief Middle East economist at HSBC. Less Risk In a sign of the economic disparity, investors see less than one-fifth the risk in Saudi Arabian bonds compared with Dubai’s, according to trading in credit-default swaps. The cost of protecting against Dubai government default stood at 473 basis points on Jan. 27, CMA Datavision prices show. Bond-default risk for Abu Dhabi was 138, for Qatar 97 and 83 for Saudi Arabia. The seven-member U.A.E. will grow by no more than 1 percent this year because of a continuing contraction in Dubai, the IMF forecast Jan. 26. Saudi Arabia will post growth of almost 4 percent, according to a Jan. 13 forecast by Banque Saudi Fransi. Qatar, which plans to raise its production of liquefied natural gas by 42 percent to 77 million tons by September, is expected to have GDP growth of 17 percent in 2010, according to a median forecast of analysts surveyed by Bloomberg in November to December 2009. The country is considering an investment in Petroleo Brasileiro SA , Brazil’s state-controlled oil company, Qatari Energy Minister Abdullah bin Hamad al-Attiyah said on Jan. 21. The next day, Brazilian Energy Minister Edison Lobao said Qatar may invest in a refinery joint venture with Rio de Janeiro-based Petrobras. Credit Squeeze The Gulf region as a whole suffered from a credit squeeze last year provoked by the global financial crisis. That, along with the sharp fall in oil prices from a peak of $147.27 a barrel in July 2008, led to the slump in 2009. Dubai, where real-estate prices have plunged 50 percent since their 2008 peak has fared the worst as it struggles under at least $80 billion in debt. Dubai World, one of three main state-owned holding companies, avoided default in December only with an infusion from neighboring Abu Dhabi that allowed it to repay a $4.1 billion Islamic bond. Bank lending elsewhere in the Gulf was also upset by the default of two Saudi family conglomerates. Eighty lenders, including BNP Paribas SA and Citigroup Inc. , are owed at least $15.7 billion by the two groups. Bank credit in Saudi Arabia declined 6.6 percent in the 11 months through November, 2009, central bank data shows. This year, government spending will remain the key driver of growth in Saudi Arabia as well as in most other Gulf economies as banks remain reluctant to lend, said John Sfakianakis , chief economist at Banque Saudi Fransi. In addition, Abu Dhabi has sovereign assets of about $426 billion, one of the world’s largest funds, according to RGE Monitor in New York. Saudi Arabia holds a fund of $358 billion, Qatar $75 billion and Kuwait has about $271 billion. To contact the reporters on this story: Henry Meyer in Dubai at hmeyer4@bloomberg.net ; Arif Sharif in Davos at asharif2@bloomberg.net

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Gulf Gap in Davos Belies Booming Economies in Oil-Rich Saudi Arabia, Qatar

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Lebanon Time-Line

Introducing Lebanon

Coolly combining the ancient with the ultramodern, Lebanon is one of the most captivating countries in the Middle East. From the Phoenician findings of Tyre (Sour) and Roman Baalbek's tremendous temple to Beirut's BO18 and Bernard Khoury's modern movement, the span of Lebanon's history leaves many visitors spinning. Tripoli (Trablous) is considered to have the best souk in the country and is famous for its Mamluk architecture. It's well equipped with a taste of modernity as well; Jounieh, formerly a sleepy fishing village, is a town alive with nightclubs and glitz on summer weekends.

With all of the Middle East's best bits - warm and welcoming people, mind-blowing history and considerable culture, Lebanon is also the antithesis of many people's imaginings of the Middle East: mostly mountainous with skiing to boot, it's also laid-back, liberal and fun. While Beirut is fast becoming the region's party place, Lebanon is working hard to recapture its crown as the 'Paris of the Orient'.

The rejuvenation of the Beirut Central District is one of the largest, most ambitious urban redevelopment projects ever undertaken. Travellers will find the excitement surrounding this and other developments and designs palpable - and very infectious.

Finally, Lebanon's cuisine is considered the richest of the region. From hummus to hommard (lobster), you'll dine like a king. With legendary sights, hospitality, food and nightlife, what more could a traveller want?

Introducing Beirut

What Beirut is depends entirely on where you are. If you’re gazing at the beautifully reconstructed colonial relics and mosques of central Beirut’s Downtown, the city is a triumph of rejuvenation over disaster.

If you’re in the young, vibrant neighbourhoods of Gemmayzeh or Achrafiye, Beirut is about living for the moment: partying, eating and drinking as if there’s no tomorrow. If you’re standing in the shadow of buildings still peppered with bullet holes, or walking the Green Line with an elderly resident, it’s a city of bitter memories and a dark past. If you’re with Beirut’s Armenians, Beirut is about salvation; if you’re with its handful of Jews, it’s about hiding your true identity. Here you’ll find the freest gay scene in the Arab Middle East, yet homosexuality is still illegal. If you’re in one of Beirut’s southern refugee camps, Beirut is about sorrow and displacement; other southern districts are considered a base for paramilitary operations and south Beirut is home to infamous Hezbollah secretary general, Hassan Nasrallah. For some, it’s a city of fear; for others, freedom.

Throw in maniacal drivers, air pollution from old, smoking Mercedes taxis, world-class universities, bars to rival Soho and coffee thicker than mud, political demonstrations, and swimming pools awash with more silicone than Miami. Add people so friendly you’ll swear it can’t be true, a political situation existing on a knife-edge, internationally renowned museums and gallery openings that continue in the face of explosions, assassinations and power cuts, and you’ll find that you’ve never experienced a capital city quite so alive and kicking – despite its frequent volatility.