The immediate outlook for the Middle East looks more uncertain in light of President Donald Trump's decision to withdraw from the Iranian nuclear deal. That decision, added to ongoing conflict in Yemen and Syria, and Saudi Arabia's battle for dominance with Iran and its allies, further complicates the wider region. But commerce and industry ministers from Kuwait and Bahrain, as well as Gulf business leaders, said the region had managed to prosper despite a backdrop of conflict.
As CNBC writes in the article War is nothing new to us and we're prospering despite the conflicts, Middle East ministers say, "In the past 50 years, this region has always been at war, whether it's the Gulf War, the Israeli-Palestinian conflict, today it's the Yemen war, this will go on. But in that same period of time the GCC (Gulf Cooperation Council) has prospered tremendously," Jassim Al Seddiqi, CEO of the Abu Dhabi Financial Group, said during the Gateway Gulf Investment Forum in Bahrain on Wednesday. "The margins in the GCC are superior, the tax regime is superior. Please don't forget South Korea has been a neighbor to North Korea for a very long time and yet it has prospered in the last 30 years," he added.
The Gateway Gulf forum taking place in Manama, Bahrain, is aimed at exploring ways to attract foreign investment into the Gulf as well as looking at the challenges the region faces, such as youth unemployment, the diversification process, boosting private sector involvement and geopolitical instability. Perhaps the most tumultuous events of the last 10 years have been the Arab Spring of social uprisings in late 2010 to 2011 that showed the appetite, particularly among the young, for change. The rise of the so-called Islamic State, which grew partly out of a power vacuum in parts of Iraq and Syria, has also dominated the region in the last few years, as have civil wars in Syria and Yemen, widely seen as a proxy war between Saudi and Iran.
Bahrain's Minister of Industry, Commerce and Tourism, Zayed Al Zayani, said investors were not deterred by the backdrop. "Risk is always factored into the investment. No investment in the world is riskless," he said during the panel, entitled "The Rise of the New GCC." "But when you look at the stability of the region as an investor you wouldn't take an isolated year or two, you'd look more at the trend and cycle, so I think with all our challenges, with all our threats, with all the risks around, the GCC as a region has proven to be sound."
The Gulf refers to countries that surround the Persian Gulf in the core of the Middle East, and mainly refers to those that are part of the Gulf Cooperation Council (GCC), a political and economic alliance of six Middle Eastern countries — Saudi Arabia, Kuwait, the United Arab Emirates, Qatar, Bahrain, and Oman.
Despite its location, long-time GCC nemesis Iran is excluded from the group. Iraq, though in the region, is also not in the GCC.
Bahraini minister Al Zayani told the panel that the GCC is "about to embark on a new journey." "The countries in the GCC have developed stable economies driven by oil revenues and today diversification seems to be the top agenda item," he said. He said Bahrain had had a "head start" on diversifying its economy, having started its diversification process in the 1960s and 1970s by diversifying into, and deregulating, various industries. As part of this diversification process, governments are trying to encourage the private sector to take a leading role in the economic transformation, while policymakers take more of a regulatory role.
Khaled Nasser Abdullah Al-Roudan, Kuwait's minister of commerce and industry, told the panel that government cooperation with the private sector is a necessity. "Oil will not be the only source of revenue to rely on in the future, therefore all these economic reforms are positive steps taken by GCC counties and there is cooperation to attract foreign direct investment," he said.
Representing the private sector, Kuwait's Alshaya Group's Executive Chairman, Mohammed Alshaya, said the key ingredient to economic success was the GDP (gross domestic product) per capita and getting populations to spend more. "No investment is riskless and look at the history of the GCC, with all our challenges and threats, the GCC has proved to be sound and growing. And people who have invested here have come back and invested further," he said.