When General Electric sold its plastics division in 2007, the most attractive buyer was not a European conglomerate, nor a major North American firm; it was the Riyadh-based group SABIC.

As Citigroup, then the world’s largest bank, began to buckle during the credit crisis of 2008, the first waves of relief came not from Washington or Wall Street, but from Gulf-based private and institutional investors.

As potential losses for Gulf investors mounted in 2009, family feuds, debt defaults, and controversies abounded and caused ripple effects throughout global markets. These developments both revealed challenges facing the region’s institutions and highlighted the central role Gulf capital had come to play in international finance.

The rise of capital from the Middle East and the growth of Islamic finance are changing the landscape of global markets. Unprecedented opportunities exist, but only for those with an understanding of the past, present, and probable future of Gulf Cooperation Council (GCC) countries, and the rapidly-evolving Islamic finance sector.

Gulf Capital and Islamic Finance: The Rise of the New Global Players (McGraw-Hill, 2010) takes a broad yet detailed view of the topic to look at the ways Gulf capital and Islamic finance have moved onto center stage in the world’s financial system. These pages vital answers to important questions, including:

• In what regions, asset classes, and sectors are Gulf-based institutions investing – and what are their objectives?
• What is the landscape of Gulf-based institutional investors?
• What makes Islamic finance “Islamic”?
• How can international firms tap into Gulf capital, and what does it take to serve Islamic finance customers?
• How is Shariah compliance affecting global capital flows?
• How is the rise of Gulf capital affecting financial markets—and how should it be regulated?

The book is tailored to be a core resource for professionals seeking to understand Gulf investments, Islamic finance, and their impact on global markets. In it, you’ll find in-depth knowledge on a host of vital topics, including:

• Background and context on the rise of Gulf capital and Islamic finance: their origins, evolution to date, and current landscape;
• Developments, trends, and the key strategic and socio-demographic shifts that give clues about their future evolution;
• Global implications of the rise of these new players—what their increased importance means for investors, bankers, regulators, and international markets; and
• The role of Gulf capital in an emerging, multi-polar financial order, how Gulf capital and Islamic finance are changing the landscape—and whether they should be seen as opportunities or threats.

Involvement with Gulf-based investors in international markets is already bearing financial and strategic fruit for savvy global firms, as well as influencing reform in the GCC region. The flow of capital in and out of Shariah-compliant instruments presents tremendous opportunities for those who understand—and are prepared to meet—the aspirations and needs of these investors. Gulf Capital and Islamic Finance provides these firms and professionals with in-depth knowledge that builds a solid platform for dealing with businesses in a region that is assuming a broader role in the global economy.

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Advance Praise for Gulf Capital & Islamic Finance

“Aamir Rehman has written a lucid and well-researched guide to tapping capital in the Gulf. He is right that appreciating the underpinnings of Sharia-compliant finance is key to understanding the mindset of Muslim investors. This book is a ‘must read’ for anyone seriously interested in the Gulf area’s financing potential.”

- Samuel L. Hayes III, Jacob Schiff Professor of Investment Banking, Emeritus, Harvard Business School

“If you want to understand the meaning and implications of Islamic Finance, Aamir Rehman’s Gulf Capital & Islamic Finance is the one volume you need on your desk. Written primarily for financial and investment professionals with a need to understand more about the impact of Gulf investments and Islamic Finance on global markets, Rehman’s newest book makes this formerly esoteric topic accessible to anyone with an interest in the increasingly important energy rich Gulf countries.”

- Michael W. S. Ryan, PhD, Former Senior Vice President of the Middle East Institute & VP for Administration and Finance, Millennium Challenge Corporation

“A timely and useful book on the growing relevance to the global economy of Gulf capital and Islamic finance. Aamir Rehman’s deep knowledge, passion, and engagement with the topic have come together in a book that provides insight and practical advice on how to tap into a rapidly growing source of capital. This book will help institutions navigate their way successfully through the growing Islamic finance industry”

- Iqbal Khan, CEO, Fajr Capital, and former founding CEO, HSBC Amanah

“With the region’s increasing prominence in global capital markets, this timely piece is essential reading for anyone trying to gather a nuanced understanding of the landscape of Gulf capital and the fast-growing Islamic finance industry and the increased “shari‘a-affinity’ of its stakeholders. Brilliantly written, easy-to-read, Aamir Rehman has leveraged a luminous career as a corporate strategist for the Middle East to put together the comprehensive guide to Gulf capital and Islamic finance”

- S. Nazim Ali, Director, Islamic Finance Project, Harvard Law School

“Gulf Capital & Islamic Finance: The Rise of New Global Players is an in-depth fresh study on the subject. It is lucidly written, well documented and thoroughly investigated. Undoubtedly the book fills an important gap in the literature and is an indispensable source for both specialists and common readers.”

- Dr. Ibrahim M. Oweiss, Professor Emeritus, Georgetown University

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Download an excerpt

The fastest growing city in the world… could it become the most important place on the planet? – The Guardian

In December 2007, Dubai & Co.: Global Strategies for Doing Business in the Gulf States, a breakthrough book published by Mc-Graw-Hill will be released to bookstores worldwide. The book is the first of its kind and offers a strategic guide to global firms seeking to do business in the highly attractive markets of the GCC. The book makes the case for why global businesses cannot afford to ignore the region and then guides multinationals with strategies along all key dimensions of their business model: market entry, marketing, human resources, and more.

Why Dubai & Co.?

• The Gross Domestic Product per capita of the Gulf States has reached nearly 3 times that of China and 5 times that of India.
• Dubai has 4 times more retail shopping space per person than the United States.
• More than 28 million passengers fly through Dubai International Airport each year, and its new airport will be bigger than Chicago O’Hare and London Heathrow combined.
• Dubai’s leading real estate developer has achieved a higher market valuation than any other in the world.
• In recent years, Gulf economies have grown almost three times faster than the rate of the world’s most developed countries.
• The Gulf States are home to some of the world’s largest institutional investors, with significant stakes in prominent firms like the Four Seasons Hotels, Apple Computer, Daimler-Benz, Ferrari, Deutsche Bank, and China’s largest IPO in history.

It’s time to face the facts: No company with global aspirations can afford to ignore Dubai and the countries of the Gulf Cooperation Council (GCC). This fascinating strategic guide applies a global perspective to one of the fastest growing regions on earth will open up a whole new world of opportunity for you and your company. Written by Aamir A. Rehman—the former global head of strategy at HSBC Amanah —Dubai & Co. will shatter the myths you may have about the Middle East, revealing all of the cultural insights you need to know, consumer markets you need to tap, and corporate strategies you need to succeed.

Key Insights

The book includes case studies of what really works—and what doesn’t—for global businesses such as McDonald’s, GE, IKEA, Kraft, Honda, Nestle, Zara, Proctor & Gamble, and others who have already built thriving businesses in the Middle East.

The Gulf region is experiencing unprecedented growth in energy, financial services, consumer goods, hospitality, retail, real estate, technology, shipping, and countless other industries. According to global strategist, advisor to Fortune 500 companies, and Harvard Business School alumnus Aamir A. Rehman, no truly global firm can afford to ignore the booming GCC. You’ve got to understand the region, the people, the policies, and more. Thankfully, he’s put his insights, first-hand experience, and field-tested advice into one comprehensive strategy guide. Welcome to Dubai & Co.

This up-close, in-depth guide will help you to:

• Deepen your understanding of a region of critical importance to global business
• Change your perceptions about the Gulf states and the broader Middle East
• Understand and negotiate with different cultures and markets
• Create corporate strategies that fit your firm and the region
• Expand your international business faster, bigger, and better
• Access Gulf capital more effectively, enabling expansion and generating both local and global profits

Even if you have doubts or fears about the Middle East, this essential hands-on book will show you how to successfully navigate the region’s most attractive markets:, the UAE, Saudi Arabia, Qatar, Bahrain, Kuwait, and Oman. You’ll come to see that the Gulf region is a pocket of prosperity and stability within the broader Middle East, and offers a business environment in which multinationals can thrive. The key, however, is to approach the markets with savvy, manage real risks and drawbacks, and craft appropriate corporate strategies.

You’ll discover why the economies of the Arabian Gulf states are among the most dynamic in the world, with staggering amounts of wealth being generated at historic rates. You’ll learn the key characteristics of each country—historical, demographic, political, economic, and regulatory— in order to adapt your business to each unique environment. You’ll hear stories of major companies that paved the way for your success. You’ll even find a “Key Lessons” section of the end of each chapter to help you plan your own winning strategy.

Whether you’re already doing business in the Middle East, or just thinking about expanding your company into new markets, Dubai & Co. is the perfect guide to one of the greatest growth opportunities in the world.

Key Chapters

• The GCC in the Broader Middle East
• Think Again: Misconceptions about the GCC
• Market Attractiveness and Risks
• Essential Background on the GCC Markets
• A Piece of the Action: Market Entry Strategies
• Market Entry Strategies: Marketing to GCC Buyers
• Building Your Team: Human Capital Strategies
• Capable Capital: Financial Strategies
• Building GCC Awareness at the Global Head Office

Order it Now

Dubai & Co. is available for order at Amazon, McGraw-Hill and in local bookstores.

The K-Dow breakup is, in a number of ways, unfortunate. The journal Middle East Economic Survey perhaps summed it up best when it noted “it is hard to find anyone at all connected with Kuwait’s oil industry who thinks the K-Dow deal was bad for the country.” The deal had been carefully assessed, reviewed, and approved by the prime minister. Nonetheless, the public controversy was sufficient to stop the partnership.

The breakup is strikingly reminiscent of the Dubai Ports World (DPW) controversy in the US – except in reverse. Questioned by US media outlets and members of Congress, the DPW transaction was ultimately re-structured (despite having the support of the Bush administration) to avoid a confrontation with Congress. A Harvard Business School case study later dubbed the affair a “debacle.” In the case of K-Dow, we see a similar phenomenon – except that this time the questioning regulator is from the Gulf.

This turn of events signals that – at least for transactions related to Kuwait and Bahrain (the Gulf states with the most activist parliaments) – consideration of legislators’ concerns is becoming more of a two-way street. Whereas Gulf investors have long been accustomed to the sensitivities of US and EU legislators and media, multinationals dealing with the Gulf have not had a similar challenge. Foreign companies have been able to rely on their Gulf counterparties to fully manage the local politics. Almost none would have imagined that a deal approved by Gulf prime minister would subsequently face hurdles.

Going forward, global firms sourcing capital from certain Gulf states will be well-served to consider potential legislative and media controversy as a potential risk factor. This capability is not alien to multinationals, as legal and corporate affairs divisions are increasingly accustomed to such analysis in the US and EU. What’s new will be the application of this toolkit to the Gulf.

For Gulf investors, the key implication is that they will need to assure global partners that post-agreement controversies will not force deals to fall apart. After the K-Dow affair, international partners may insist on stronger breakup penalties and other measures of assurance. This may mean outreach and consultation with a broader set of local stakeholders.

Tough economic times often breed protectionism legislator activism. The K-Dow affair shows that even Gulf-related transactions may be subject to these pressures, and parties involved will need to add such considerations to their analysis.

While the direct economic impact of the Hajj is easily observable, the strategic implications for GCC — and particualrly Saudi — competitiveness are more subtle. If fostered and applied more deeply, capabilities and skills linked to the Hajj can be pivotal in developing and expanding world-class initiatives and companies. The skill set of the Hajj economy can, if viewed strategically, be a significant source of competitive advantage.

Infrastructure and logistics management

The infrastructure demands linked to the Hajj are enormous. From investment in airport facilities (e.g. an additional terminal for the Hajj season) to the need for roads and tunnels to procuring fleets of buses transporting pilgrims, facilitating the Hajj requires significant infrastructure. On top of this physical infrastructure, the logistics of managing the flow of people, water, food, electricity, and other utilities are daunting.

Institutions involved in Hajj infrastructure and logistics have developed a set of skills and competencies that are immensely valuable. Creatively leveraging, replicating, and applying those skills in a broader range of ventures represents a unique opportunity for such institutions and for the Saudi economy at large.

Public health and safety management

Managing the public health and safety aspects of the Hajj is another unique challenge. No other venue brings together millions of travelers  — mainly from the developing world — in close quarters where infectious  diseases can spread rapidly. The techniques used to mitigate risks and prevent outbreaks are immensely applicable in other contexts.

With investment in research and improvement, one can envision Hajj-related policies becoming a reference and a source of best practices for health and safety professionals worldwide.  Firms with expertise in this area could compete for projects worldwide.

Connectivity with the Muslim world

In bringing together Muslims from around the world, the Hajj naturally fosters trade and commerce across borders. In fact, the famous “Silk Road” of regional trade in the Middle East and Asia was paved largely by pilgrims and by merchants seeking to serve them.

As host of the Hajj, Saudi Arabia enjoys a natural advantage as a potential trade hub for the Muslim world.  Taking on this role, however, would require significant economic reform in the Kingdom as well as fundamental enhancements to the Saudi business environment.

Shariah-compliant savings and financial services

In saving for the Hajj, Muslims worldwide are particularly mindful of the need for complying with the Shariah. A Muslim who may otherwise not always invest Islamically will be highly inclined to invest his or her Hajj savings according to Shariah guidelines, since the Hajj is an inherently religious journey.

Malaysia’s Tabung Haji — an institution created to facilitate saving for the Hajj — is a prime example of the link between the pilgrimage and Islamic finance. The need to save for Hajj naturally channels funds towards Shariah-compliant vehicles, and Hajj-related entities are advantaged in attracting Islamic capital.

Throughout history, the  “Hajj economy” has been a source of prosperity. In today’s global economy, the skills associated with the Hajj — if strategically leveraged — could also  become a source of competitive advantage.

In a late September piece, I argued that the Gulf would not be immune from the current global financial crisis. One reason cited was the volatility of oil and gas prices as a result of the crisis. This month, oil prices remain volatile and show a strong downward trend, dipping well into the $60s per barrel and closing yesterday around the $70 level. While it remains unclear where the oil price will settle, the implications of a cheaper barrel are evident for GCC economies and their role in capital markets. A key framework for understanding the effect is the “arithmetic of surplus.”

Some oil-producing countries, such as Norway, use oil revenues principally for national savings and investment. If the price of a barrel drops from $100 to $70, the amount of new wealth that can be invested in capital markets goes down by 30% plus an adjustment due to the cost incurred in producing the oil. Nonetheless, the relationship of oil price to new, invest-able wealth is largely linear beyond the adjustment for production costs.

In the Gulf, however, the matter is fundamentally different. Oil and gas revenues are the principal source of income for most Gulf federal governments and are used to fund the daily operations of the state. When revenues exceed expenses, there are surpluses. These surpluses provide the new, invest-able wealth which flows into global capital markets. Strong surpluses have enabled the large investment flows we have witnessed in recent years.

Imagine, hypothetically, that a certain state needs an oil price of $60 to meet its budgetary needs and its cost of production. If oil is trading at $100, there is a surplus of $40 per barrel. If the oil price comes down to $70, the surplus per barrel becomes $10. Although the absolute price of oil goes down by only 30%, the surplus – the new, invest-able wealth – decreases by a full 75%. Thus, budgetary requirements mean that changes in the oil price have a disproportionate effect on the amount of new wealth.

In reality, each Gulf state has its own “break even” price and a $70 barrel still allows sizable surpluses. As recently as 2006, Saudi Arabia’s break even price was understood to be in the $40s. Today, it is almost certainly higher due to expanded needs and a weaker dollar. Below the break even figure, the country would need to dip into its capital reserves – as it has done in previous low-oil-price eras – to meet its domestic financial needs. New foreign investment would be highly constrained.

The UAE, Qatar, and Kuwait, by contrast, have far smaller budgetary burdens to bear, and a bulk of their budgets is allocated to capital projects rather than immediate needs. These countries therefore still enjoy large surpluses at today’s oil prices. At $130 per barrel, however, their new invest-able wealth was growing far faster. The confidence of Gulf investors – naturally linked to their confidence in future energy price – will be shaken as a result of the current volatility.

The Gulf’s role in global capital flows is fundamentally linked to the “arithmetic of surplus.” As discussed, dips in absolute oil prices have disproportionate effects on budget surpluses. As long as healthy surpluses remain, however, the GCC can continue to play the pivotal role it has adopted in the world’s capital markets.

The Gulf’s vulnerability to the global financial crisis is evident in a number of ways. GCC equity markets have lost significant value in 2008, and investor confidence has weakened. Whereas just months ago, GCC entities were keen to increase their stakes in Western banks (e.g. ADIA’s investment in Citigroup), today they shy away from the ailing financial sector. The global trend of “de-leveraging” (a forced reduction of the debt-to-equity ratios of financial institutions, corporations, and households) will almost certainly manifest itself in the Gulf as well.

While there are many reasons why the Gulf is not immune to the current crisis, three salient linkages are particularly noteworthy:

1. The jitters felt worldwide are shared by Gulf investors

Immediately following the collapse of Lehman Brothers, an FT piece cited a UAE Central Bank official commenting that as much as 90% of “speculative” foreign money may have left UAE markets due to concerns regarding the crisis and its potential impact on local currencies. Over the course of the year, the Saudi (TASI) equity index was down about one-third year-to-date, as was the the Dubai stock market. Even the highly buoyant Qatar market was down 14% year-to-date following the Lehman collapse. Gulf investors, like their counterparts elsewhere, seek safer havens for their capital and are shifting away from volatile equity markets.

2. GCC institutions and investors hold securities affected by the subprime crisis

It’s important to remember that the Gulf’s leading investors generally hold a bulk of their assets outside the region. Gulf institutions and investors — long-time holders of US debt instruments, commercial paper, and financial stocks — have felt the pinch of collapsing asset values in their international portfolios. This pinch constrains institutions’ appetite and ability to invest, thereby dampening the local investment environment.

3. Volatile commodity prices increase the Gulf’s uncertainty

In the midst of the current crisis, the prices of oil and other commodities have been highly volatile — with the barrel dropping about $30 in a single day, then recovering most of its value in a see-saw pricing environment. This volatility makes Gulf institutions particularly nervous, as sustained energy prices are the backbone of the region’s wealth and the driver of increased liquidity.

Fundamental economic indicators remain positive in the Gulf, with substantial surpluses and savings, strong corporate profits, attractive demographic shifts, and ongoing de-regulation. In the current environment, however, the underlying strength of Gulf economies is obscured by turbulent financial markets. In yet another reflection of the interdependency of capital markets today, the Gulf is far from immune from the current financial crisis.

One key element required to host the Games – capital for investment in infrastructure – is available in the Gulf today more than almost anywhere else in the world. Several Gulf economies – and in particular the UAE, Qatar, and Kuwait – enjoy unprecedented surpluses and are engaging in large-scale infrastructure projects (e.g. airports, roads, and utilities) like never before. Gulf cities are better equipped than many of their counterparts around the world to build the stadiums, housing, and other facilities needed to host the Games.

Gulf cities also have a “location advantage”: at the crossroads of Europe and Asia, the GCC is easy to reach and its timezones are compatible with a large chunk of the global Olympic viewer base. For the most part, Europeans struggled to watch the Beijing Games live and in the US the time difference was a full 12-15 hours. The GCC, by contrast, is only 1-2 hours ahead of Western European time and a manageable difference from much of Asia.

Further, several Gulf cities have clear and demonstrated aspirations to raise their profiles on the world stage and might therefore see hosting the Olympic Games as helpful. This is particularly true of Doha, Dubai, and Abu Dhabi. As host of a watershed 2001 WTO summit and the 2006 Asian Games, Doha raised its profile significantly and signaled to the world – especially through the Asian Games – its rapid growth and development.

Despite these strengths, there are a number of reasons why Gulf cities may not find the role of Olympic host consistent with their development strategies. One is the question of how sporting facilities would be utilized after the Olympics: the total Gulf population is about 40 million, and the most likely host counties (the UAE, Qatar, and Kuwait) have populations below 5 million. For countries with populations less than half of New York City’s, the long-term need for massive stadiums is not immediately evident.

A second issue is that Gulf countries have a limited Olympic tradition. Despite Bahrain’s one gold medal in the 2008 Games, GCC countries have not been at the forefront of Olympic competition as larger nations of the world have been. Some might argue that Gulf states would need to build a deeper Olympic presence before seeking to host the event.

Third, the full scrutiny that comes with Olympic attention may not be desirable for GCC states. As evident surrounding the Beijing Games, hosting the Olympics exposes a country to both wanted and unwanted publicity from a wide range of perspectives. In pursuing the Games, potential host counties need to weigh whether this scrutiny is indeed worth inviting.

In some respects, Gulf cities could potentially mount impressive bids for hosting the Olympics in future decades. What’s less clear, however, is whether hosting the Games truly fits with GCC cities’ long-term aspirations.

The sources of Gulf carriers’ advantage lie in the key inputs and enablers required for an airline industry. One key input is capital — both for investment in the airline (e.g. new planes) and for investment in the infrastructure supporting the airline (e.g. airports). In a time of unprecedented surpluses, Gulf states are uniquely positioned to invest in both. Other carriers, meanwhile, struggle for both the capital to invest in their fleets and to lobby their governments for improvements in infrastructure.

A second crucial input is oil. Gulf airlines’ proximity to oil production sources provides cost advantages not available elsewhere. More importantly, rises in the oil price act to strengthen Gulf economies overall (and therefore increase demand for air travel), offsetting the rise in input costs.

Third, airlines need attractive routes and fundamental passenger demand. In addition to flying locals and expatriates in and out of the country, Gulf airlines increasingly tap into long-haul passenger flows between the US / Europe and Asia. Located at the crossroads of these regions, the Gulf can conveniently play host to transit passengers and short-stay tourists. According to census data sourced in 2007, nearly 30 million passengers fly through Dubai each year. That’s more than 23 passengers per resident — twice the figure for London and four times the figure for New York.

Fourth, airlines need a flexible, skilled labor force to staff their operations. Many of the woes faced by US and European carriers are linked to labor costs (especially pensions) and the effects of rigid unionization. While the Gulf has a smaller local pool of talent to draw on, it is able to attract expatriates on lucrative — yet flexible — packages that keep labor costs manageable while also attracting strong talent.

Strength in these four areas naturally give Gulf airlines an edge in the global marketplace. At the same time, Gulf airlines do face some unique challenges. One such challenge is the risk of over-capacity. Dubai is building an airport in Jebel Ali which is the size of London Heathrow and Chicago O’Hare combined and will have the capacity for 120 million passengers per year. That’s about 30 times the population of the UAE. Up the road in Abu Dhabi, an airport with the capacity for 40 million passengers is being planned. Qatar also has ambitious airport plans, while Kuwait and Saudi Arabia are likely to upgrade key airports soon as well.

The capacity being built by Gulf airlines — both in terms of airport space and passenger seats — far exceeds their domestic demand. They are all seeking to capture the long-haul transit market, capitalizing on increased flows to China, India, and the Far East. Competition for these passengers may become fierce, and it is unlikely that all Gulf airlines will operate at their desired level of utilization.

Gulf airlines’ ownership models can also be both a benefit and a drawback — public-sector owners can be patient for financial return, but may miss some of the shareholder pressures which can lead to robust examination and frequent reviews of their strategies. This challenge is common across a large number of carriers around the world in which governments hold large stakes.

The airline sector is one in which Gulf businesses have the key ingredients for success. GCC-based carriers are therefore likely to remain key players in the global airline sector, taking a central role in the marketplace for years to come.

In general, two types of tools are used for managing inflation: monetary policy and fiscal policy. OECD observers are most familiar with the use of monetary measures — namely, the raising and lowering of interest rates — as the first line of defense against inflation or recession. Fiscal measures relate to government spending and resource allocation.

All GCC member states, with the exception of Kuwait, peg their currency to the dollar and therefore have limited flexibility in the realm of monetary policy. While many have blamed the peg for “importing inflation,” it is telling that even Kuwait — without a dollar peg — is facing double-digit inflation. Due to a number of trade-related concerns, it appears the dollar peg is here to stay for at least the short-term future.

It is in the realm of fiscal policy where GCC economies have more flexibility. On almost a daily basis, governments make choices about how much oil and gas to produce and — perhaps more importantly — how to allocate the revenue from energy exports. Much of the region’s growth has been spurred by investing more of the energy surpluses at home, as part of overall economic development and diversification strategies. Allocating the surplus is therefore a key instrument in the trade-off between growth and inflation.

The Gulf’s toolkit for managing inflation is thus a unique one. Monetary policy is relatively constrained, while the flexibility of fiscal policy — and particularly the allocation of energy surpluses — is substantial and potentially more potent than in states without such surpluses.

One key factor driving Gulf inflation is the rising prices of imports, upon which the GCC economies rely. Since many of these imports come from the EU and other non-dollar economies, their prices in relative terms have soared as the dollar has lost value. While policy makers are taking steps to reduce import-dependence, the economies and natural endowments of the Gulf are such that imports are simply indispensable.

In this environment of unprecedented energy prices, Gulf policy makers are choosing to stimulate their local economies as never before. Inflation is a natural consequence of this choice. The challenge will be for Gulf decision makers to grow household incomes at least as fast as inflation — and to do so using their unique toolkit.

The WSJ piece, entitled “Mideast Boom Lifts GE, Other Firms” notes that, last year, GE’s revenue from the Middle East region exceeded its China revenue by a 35% and was more that twice the revenue generated from India. The piece, which quotes both Jeffrey Immelt and GE regional head Nabil Hebayeb, discusses GE’s $50m research facility in Qatar (a case study of which is found in Dubai & Co.). Hebayeb notes that GE seeks to earn profits “in the country, not just from the country” — a spirit of collaboration which is refreshing and well-received (as well as often overlooked) in the region. The article, written by Kathryn Kranhold, is available here to WSJ subscribers.

The Fox Business piece relates to an upcoming event in Dubai on sovereign wealth funds and global private equity. The piece includes an estimate, provided by the firm Private Equity Intelligence, that sovereign funds control $3 trillion in wealth, 40% of which is held by Middle East entities. The piece also quotes Abdul Aziz Yaqoob Al Serkal of M’Sharie, Dubai Investments’ private equity arm. My own quote relates to the increased market power of sovereign investors, and how their approach to PE investment — even when investing in the debt component of transactions — can be fundamentally different from the approach customarily taken by banks. The full piece is available here.