You probably have heard of NAFTA (North America Free Trade Association), OPEC (Organization of Petroleum Exporting Countires), the EUROPEAN (European Union) and the BRIC (Brazil Russia India China) countries… but have you heard about MENA?
Ok, you ask… the gender chart and why what exactly is care?
When conventional wisdom is not working any more, we need alternative investment strategies and you should give consideration to a very important region that collectively Silk Road economic belt countries has a bigger economy than Brazil, Russia, and India… 3 out of the 4 BRIC countries. And, in terms of growth, this region is growing faster than any of these countries.
Population wise, this region is bigger than the usa and is approximately equal in population to the EUROPEAN. In addition, this region has an exploding population (which is good from an engine of growth perspective… reference a key theme in recent presentation from Stuart Varney of Monk News at WizeFEST 2009, a conference this author recently attended).
This region is in the center of a part of the world along the old Cotton Road… where we think of a network of traders with caravans loaded with cotton, spices, flowers, jewelry, and gold… and trading passages with the romance of the Indian Water. From Perth, Australia to Mombassa, Kenya along the region of East Photography equipment with passages top to bottom the Persian Gulf and the Red Sea.
There is a political thaw underway in a country in this region that has been the mercantile crossroads between East and Gulf since its days as a link on the old Cotton Road.
Examples of this thaw are that the US is sending an ambassador to this country from a four-year absence and the US is eliminating move bans to this country.
The spot is called MENA or the middle East and North Photography equipment. Among its largest economies are Saudi Arabia (where this author had a home base for just two years) and the United Arab Emirates (which includes the go-go city of Dubai). As a result, MENA holds 60% of the world’s proven oil reserves and nearly half of its natural gas.
Much has changed in this region over the years and its reach has expanded in a way that The new Cotton Road weaves through Damascus, Riyadh, Dubai, Mumbai, Chennai, Kuala Lumpur, Singapore, and Hong Kong. Along the New Cotton Road, key alternative growth strategies are the scarcity of water and food, infrastructure needs, energy (in terms of drilling, pumping, and distribution) and engineering services… and finally, it offers growth not dependent on US trade (which is expected to be quite anemic).
In 2000, China’s exports to the Arab world stumbled on just $6B. Last year, China’s exports to the Arab world ($48B) nearly matched America’s exports to the Arab world ($50B). Earlier this year, China finally passed the usa to become the Arab world’s largest trading partner… highlighting how a rising Arab world is turning away from the Gulf and Rediscovering China.
Syria is the country mentioned previously that has a political thaw underway and is the mercantile crossroads of the East and Gulf on the old Cotton Road.
The largest investor in Syria is the Chinese company, Haier, that makes washing machines and microwave ranges in the country. Another Chinese company recently completed a $180M hydroelectric plant. On the drawing board, there are big real estate projects, including resorts on the Syrian Mediterranean and beyond region. They are forty-eight, 000 hotel beds coming online over the next three years and this will almost double the amount of beds available. Holidays is up significantly in this country and currently is liable for 13% of the economy.
The spot benefits from expanded trade with China and the rest of the Asian countries that are in pursuit of the region’s oil.
The most interesting thing about this growth is that it is happening in a part of the world where water is tight and it is complicated to grow food. In Kuwait, one of the countries in the region, annual water consumption is 22 times the rainfall. Counties in the region import 60% of their food and are phasing out plant production in order to conserve water.
Ironically, many of the countries in the MENA block are investing in farmland overseas with major purchases of farmland in Indonesia, the Sudan, and Pakistan.
One of the key takeaways is that alternative investment opportunities in a growth region like MENA include food and water necessary to feed and fulfill the being thirsty of all these people as well as the energy, infrastructure, and engineering services to drill down, pump, and distribute oil and natural gas.
Your author lived and worked in the region early in his career and was always impressed with the upside potential in the region once political barriers could be overcome.
In addition, a newly released edition of the Economist had a cover story on the Arab world branded “Waking from its sleep” with a 14-page special report containing an accumulation articles. Key points in these articles indicate that there was 2 whole decades of political stagnation but there is a temperature under the surface for change.
In the Arab world, its people are needs to speak out, to strike, and to take to the streets in pursuit of their demands. As more women are educated and as more companies want a say in the state-run economies, the old pattern of the Arab governments that are virus ridden, opaque, and authoritarian, are changing.
The democratic and capitalistic movements underway include education, tolerance, and independent institutions such as judiciary and free press.
Once the last failed dictatorship is voted out, the quiet movement will be complete and the tremendous upside potential from trade will grow the spot even faster under the more liberalized economic governments.
I trust this article has introduced you to an emerging economic region… a crossroads where East meets Gulf on the New Cotton Road… and the various alternative wealth creating opportunities associated with water, food, infrastructure, energy, and engineering services related to oil and natural gas.