The Gulf states and the US have long-standing, highly interdependent relationships. Events of the past week, in the GCC and here in the US, have demonstrated both increased public acknowledgment of this interdependence and visible signs of growing connectivity between the GCC and the US economies. This trend is an important one for global business leaders to watch.

As President Bush toured the Gulf, he consistently conveyed messages of goodwill and alliance. Extremism and terror (and, to some degree, Iran) were identified as common enemies. The UAE was lauded as a model state. Bush was clearly out to “charm” his GCC hosts.

At the same time, according to a report in the Financial Times, the Abu Dhabi Investment Authority has engaged Burson-Marsteller (a member of the WPP Group) to support its public relations activities in the US. Good timing, as additional Gulf investments in troubled US financial institutions were announced during the week of sobering earnings reports and economic data. Anticipating backlash, ADIA is out to “charm” American stakeholders (presumably including regulators, opinion makers, and the general public).

Elites in both the Gulf and the US have long understood their interdependency. GCC-based institutional investors, and especially ADIA, have quietly been courted by US bankers for years as an increasingly important source of capital. Gulf states have quietly played host to US military bases (reflecting security dependence and general deference) and – except for Kuwait – maintain a currency peg to the dollar despite the imported inflation it brings.

(For more on capital interdependencies see Chapter 8 – Capable Capital: The Gulf as a Source of Capital – of Dubai & Co.)

What’s different now is not the nature of the relationships – it’s the level of awareness amongst the general public in both the US and the Gulf. For global businesses, this means at least two things.

First, expect so see more US companies taking the Gulf seriously and integrating it into their global strategies. Bush has brought both attention to the region and assurance that the Gulf states are friendly economies. Those who have long feared “political risk” will be more at ease. His enthusiasm for the region will be noticed in boardrooms nationwide.

Second, expect PR to become an increasingly important part of US-Gulf business activity. When taking capital from a Gulf investor, US firms should anticipate and prepare for scrutiny. When doing business in the Gulf, US firms – especially those working with governments – may consider actively positioning themselves as contributors to the collaboration for which public leaders in both parts of the world have called.

As business ties between the Gulf and the US deepen, the number of stakeholders involved inevitably increases. Recent events show growing recognition that the general public (with the media as a means of accessing them) is becoming a more important element in the process of strategy development.

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“Abu Dhabi fund hires media experts,” Financial Times, January 18, 2007 .
http://www.ft.com/cms/s/0/959c13e0-c5ef-11dc-8378-0000779fd2ac.html