Lineages of Revolt by Adam Hanieh

Author:Adam Hanieh
Format: epub
Tags: Middle East, Politics
ISBN: 978-1-60846-352-7
Publisher: Haymarket Books (eBook)
Published: 2013-10-01T16:00:00+00:00

The Internationalization of Gulf Capital

Over the past decade, the development of these Gulf conglomerates has been further marked by the pronounced internationalization of capital flows beyond national borders. This is true at two scales. First, the regional integration project embodied in the formation of the GCC63 has encouraged the interpenetration of the Gulf’s own circuits of capital, with conglomerate activities becoming internationalized through the GCC space. This is shown in many sectors: cross-border activities of Gulf construction companies, cross-border investments in petrochemical projects, ownership of franchise and agency rights that extend through numerous GCC countries, the expansion of UAE- and Saudi-owned malls across the Gulf, ownership structures of media and telecommunications companies, growing levels of cross-border purchases on regional stock markets (particularly Bahrain), and—most markedly—the development of private equity and other financial companies that bring together the largest GCC companies within single ownership structures. The increasing levels to which accumulation is conceived and articulated at a regional scale reflects the emergence of a pan-Gulf capitalist class, Khaleeji Capital, structured around a Saudi-UAE axis and consisting of those large Gulf conglomerates that tend to operate within these internationalizing circuits.64 In the words of a leading GCC private equity fund: “We look at the whole GCC, we believe that there is a customs union, a monetary union almost with a very close peg to the dollar, there is a cultural union and anything that sells in Saudi Arabia would sell in Dubai. So for us, we don’t look at these markets as being separate entities, we look at them as being one.”65

But the internationalization of Gulf capital has also occurred throughout the Middle East as a whole. There is a great deal of empirical evidence that confirms this expansion of Gulf capital, particularly following the rapid rise in the price of oil that began in 1999 and peaked in 2008. According to ANIMA, an EU institution that monitors FDI in the Mediterranean region, the value of projects announced by Gulf Arab investors in the region exceeded those from any other country or region in the world for the entire 2003–2009 period.66 More than 60 percent of all Gulf investments in the Mediterranean area went to Jordan, Lebanon, Egypt, Palestine, and Syria, and in these five countries the value of the Gulf’s investments was more than three times that of the EU and twelve times that of North America.67 For Syria and Lebanon, GCC FDI constituted more than 70 percent of the country’s total FDI in 2008. In Egypt, the country’s minister of investment reported that the share of GCC capital in Egypt’s FDI rose from 4.5 percent in 2005 to over 25 percent in 2007.68 In Jordan, GCC FDI was 35 percent of the country’s total FDI in 2007. The weight of these Gulf investments continued even after the 2008 global crisis. From 2008 to 2010, the Gulf as a whole was the top-ranked source of total FDI for Egypt, Jordan, Lebanon, Libya, Palestine, and Tunisia—surpassing investment flows from the United States,

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