December 6, 2007
Opec and the marble halls of Abu Dhabi
I am in Abu Dhabi - and so are the Opec oil ministers, or they were until a few hours ago. For those of you who have got your Emirates in a twist - Abu Dhabi is bigger and less flashy than Dubai. It also has far more oil - almost 10% of the world’s reserves, plus 5% of its natural gas.
So there is quite a lot of spare cash here. Abu Dhabi’s Sovereign Wealth Fund is thought to be the largest in the world - bigger than China’s. Nobody knows quite how much money it has to spend. But the lowest estimate I’ve heard is $500 billion - and the highest is $1 trillion. They recently snapped up 4.9% of Citigroup, and already own bits of Ferrari and the Carlyle Group.
The Emirates Palace Hotel, where Opec were meeting, is easily the most opulent hotel I’ve ever visited. Even part of the driveway is made of marble - a Porsche Cayenne trying to brake on marble makes a very loud squeak. The lobby (also all marble, naturally) is the size of a football field. The pianist there looked a bit like Condi Rice - although I dont think it has quite come to that, yet. One journalist who was staying at the hotel was startled to find a butler hovering in her room - asking her what temperature she would like her bath to be run. (She said that, on balance, she would prefer a shower - and he made his excuses and left.)
Given all this, it was a little hard to swallow when Opec people tried to argue in favour of the current high oil price, on the grounds that their members need more cash to spend on schools and hospitals. The Emirates Palace hotel alone cost $2 billion to build. Of course, there are Opec members that are genuinely still quite poor - Iran, Ecuador etc. But pleading poverty in Abu Dhabi is tricky.
Any decisions taken by Opec moves markets instantly. Javier Blas, who was covering the meeting for the FT, tells me that the wire services use pre-set formulas for their headlines, so that computers in investment banks can recognise them instantly and exercise trades automatically. The seconds gained by eliminating human agency can cost or save millions. At this meeting, the key headline was "Opec to maintain production". But after the meeting the Opec people were even less communicative than usual, which suggests that there is an argument going on behind the scenes. As far as we can tell, the Saudis - the most important Opec producer - want to ramp up production to lower prices and do the Americans a favour. But Iran and Venezuela - numbers two and three in Opec - are never averse to twisting the Americans’ tail, and they favour a tight market and a high price. The Iranians, incidentally, seemed in a particular good mood at this meeting. I wonder why?
As I was chatting to Javier in the lobby of the Emirates Palace, I noticed that I did not always have his full attention. Every now and then, he would glance over my shoulder. It turned out that a very important Opec type was sitting just behind me, partly hidden by a giant pot plant. Eventually Javier pounced and went to talk to him. Unfortunately, I’ m not allowed to say who he was, or what he said. But that’s Opec for you.
Tomorrow I’m off to Bahrain, for a security conference with military types from all over the world. I expect they will be a lot more open.
Gideon, the OPEC lot are indeed among the most inscrutable on the planet. Interesting that you find security types more forthcoming.
But $100 oil does seem behind us for now. The Saudis, mindful of the brewing backlash among the biggest current customers on the planet, will do their best to keep it that way.
Steve LeVine, author
Posted by: Steve LeVine | December 6th, 2007 at 9:08 pm | Report this commentThe Oil and the Glory (Random House)
http://www.oiland.glory.com
Perhaps the Saudis wanted to lower the price of oil not simply to do “Americans a favor”, but because they remembered a warning from their oil minister in the 1970’s: “The stone age did not end for lack of stones”.
Posted by: Christian VanSchayk | December 7th, 2007 at 12:33 am | Report this commentThey are just playing cat and mouse Gideon, don’t read too much into it.
Posted by: David Seaton | December 7th, 2007 at 8:50 am | Report this commenthttp://seaton-newslinks.blogspot.com/
Gideon–It is good to sense that you are perhaps a bit amazed at what you are seeing. No doubt you see reasons for long-term concern as well. No where in the world so dramatically underlines the challenges facing societies in relation to the future economic roles of women. By this I mean the virtual armies of women displaced from weak Asian, African and Central Asian economies. The phenomenon merits serious reflection, no? Nonetheless, would you agree that Dubai is an Asian city?
Abu Dhabi’s current transformation is hotter than Dubai, although Dubai is developing a near-Manhattan energy and diversity. ABu Dhabi had the charm and energy of a Topeka, Kansas downtown parking centre set on a salty backwater a few years ago.
Be certain to ask to see photos of the Burg al-Arab taken from the Gulf. To me the Emirates Palace is like a well-faced shopping mall compared to the excellence in design at the Burg al-Arab. I trust someone will get you up into the cross-bar bar there.
Have a good weekend and a safe return! Looking forward to hearing what thoughts come to mind during your late return flight!
Posted by: WCM | December 7th, 2007 at 9:41 am | Report this comment“Any decisions taken by Opec moves markets instantly … the wire services use pre-set formulas for their headlines, so that computers in investment banks can recognise them instantly and exercise trades automatically”
And people wonder why we have financial debacles like sub-prime loans?
Posted by: Dave | December 7th, 2007 at 10:57 am | Report this commentI was expecting Mr. Rachman’s commentary to focus on the destabilising factors in the UAE societies like the facts that in many of the micro kingdoms, the locals are outnumbered 10-1 by foreign workers who are increasingly restless.
Also, has anybody pondered why Al Qaeda bomb Egyptian resorts for their “immoral” activities but not Dubai that by most measures has surpassed the Egyptian tourist traps’ raunchiness? How much of a symbiosis is there between the UAE (one of the few countries that recognised the Taliban)and Al Qaeda?
If you wanted to see poverty, you could have visited any of the labour camps where the S Asian workers live a dozen to a room and share a toilet between two dozen or more (with open sewers running in the middle of the alleys).
But why bother with the dirt, heat and dust when you can sit in a 5 star hotel and write twee pieces like this?
Yours is certainly a much more pleasant and refined way to make a living. Enjoy.
P
Posted by: Pacifist | December 7th, 2007 at 11:13 am | Report this commentP–a 7-star hotel.
Posted by: WCM | December 7th, 2007 at 11:36 am | Report this commentHi WCM,
I guess I am too downmarket to know that 7-star hotels even exist.
(Reminds of the semi-joke about the peasant who sold his land for 100 pieces of gold because he didn’t know
a number greater than 100 existed!).
Best,
P
Posted by: Pacifist | December 7th, 2007 at 11:49 am | Report this commentI don’t know when will be my chance of being in the 7-Star hotel with all the top decision makers, but I certainly know that oil prices and their crucial impact on world markets have made US Dollar even more so unpredictable. And as you mention that Saudis are in favor of a price cut while others are not; this may lead to negotiations at several levels to deduce a conclusion. Protection or usurpation of oil & gas reserves has been an important security concern for the countries involved, so Gideon you might wanna make the best of the forth-coming conference as well…and then you can share hotel aesthetics as well
Posted by: Afsheen Bashir Ali | December 7th, 2007 at 12:27 pm | Report this commentA marble-cladded shopping mall with some gold encrusted on concrete and aluminium knobs here and there. 7-stars only exist in Dubai and maybe Kuala Lumpur, but not was last there. Not sure what the added two stars are about, beyond representing a new strata in property investments!
The picture you paint is not inaccurate, but, in balance, much of the worker population has chosen to be and stay there as long as possible. Many live in concrete 30-storey dormitories with 3 or 4 metres alloted per person. Still, as I once described here, the labour trafficking across the region merits close press attention. I once by chance of a rerouting found myself one of 7 Europeans on a worker flight (Gulf Air) from Muscat to Bahrain. The flight was 100 percent male, with most coming from Nepal, Afghanistan and Pakistan. The Nepalese guy next to me spoke a bit of English and said he was going on to Iraq for work. They were tired and miserable looking to the last of them.
Gideon no doubt is on British and will have no such experience.
Posted by: WCM | December 7th, 2007 at 12:30 pm | Report this commentRecently, Mr. Rachman mentioned that the 4 Seasons in Bali is the best hotel he had ever stayed in. I wonder if the bling bling at the Abu Dhabi’s Emirates Palace Hotel has changed his mind?
I think John Grapper mentioned in his blog (he has also recently visited the UAE), that the stratification of the society was one of its main problems.
He also had a witty acronym for “EMIRATES” as “English Managed Indian Run, Arabs Taking Enormous Salaries”.
Although WCM is correct that the workers still keep coming despite the poor treatment they get (which emphasises the appalling conditions in their home countries), the contrast is still very striking because there are few places where you see the winners and losers of globalisation at such close quarters.
(Please don’t lecture me that making $5 / day for working in 50 degrees heat and with no protective clothing is better than making $1 / day in India. I think that is simply saying that it is OK to exploit the desperate and the destitute. Why can’t they work decent hours and have better safety at work, even though they are from dirt-poor societies?)
Best,
P
Posted by: Pacifist | December 7th, 2007 at 1:04 pm | Report this commentMr Rachman is an international-affairs columnist, not a field reporter. Hotel lobbies and convention halls are, luckily for him, where he should mingle.
This is not to say that the overblown opulence on display in the Gulf isn’t disgusting. Maybe this should only be expected from people who, only a generation ago, were dirt-poor themselves. Their treatment of foreigners, if indeed as described here, is an abomination. But this too is to be expected: there are many camels in the Gulf, but none has as yet gone through the eye of a needle.
Posted by: RCS | December 7th, 2007 at 2:14 pm | Report this commentYes my dear RCS, they treat some foreigners badly, although some others (W European and N American get a very good deal.)
In their defence it has to be said that treating foreigners badly is a lot better than what your lot did by dispossessing people from their native lands….Foreigners can always go home. What do people do when they are made refugees in their own homeland?
I think we may be veering off topic
Best,
P
Posted by: Pacifist | December 7th, 2007 at 2:49 pm | Report this commentDear P
I agree — that you’re veering off the topic, as usual.
Posted by: RCS | December 7th, 2007 at 3:04 pm | Report this commentDear “Pacifist”,
Just remind me what your lot are doing to the Baha’i?
Posted by: AYC | December 7th, 2007 at 4:36 pm | Report this commentDear AYC,
I wrote a much longer reply but decided that it is better to keep to the thread’s topic. Just as soon as GR posts a thread about fifth columnists and religious cults, we can discuss the Bahai’s in the Iranian context of that thread.
Shalom,
P
Posted by: Pacifist | December 7th, 2007 at 4:55 pm | Report this commentand please don’t forget the Zoroastrians.
khodaa haafez
Posted by: AYC | December 7th, 2007 at 6:44 pm | Report this commentGR “Opec people were even less communicative than usual, which suggests that there is an argument going on behind the scenes. As far as we can tell, the Saudis - the most important Opec producer - want to ramp up production to lower GR prices and do the Americans a favour. But Iran and Venezuela - numbers two and three in Opec - are never averse to twisting the Americans’ tail, and they favour a tight market and a high price. The Iranians, incidentally, seemed in a particular good mood at this meeting. I wonder why?”
Yes the Iranians have started off the month with a bang…. GCC!… first time invitees!!!! NIE…egg on US Administration’s face!!!…howver, Manama Dialogue which starts today …may give them pause…
Posted by: Lisa-Helene Lawson | December 7th, 2007 at 6:44 pm | Report this commentThe Baha’is, my Persian neighbours! Wonderful people!
Since this thread deals with opulence, and since we have already been treated to some wonderful images from Iran, then here are some images of elegant opulence:
http://www.bahaipictures.com/
Posted by: RCS | December 7th, 2007 at 6:55 pm | Report this commentDear P
“fifth columnists and religious cults”?
The cat is out if the hat: you’re an Iranian nationalist masquerading as a leftist liberal. Your goal is to manipulate opinion to Iran’s benefit. Your grudge against the UAE lies in their opposition to Iranian jingoism.
Posted by: RCS | December 8th, 2007 at 5:15 am | Report this commentDear P
Re: “guest” workers, agree, and will add, as I mentioned a few months ago, that the trafficking in both workers and women in the region (and elsewhere today) is nothing less than a new form of slavery. Still, pictures of hoveled masses in the burning sands behind the parking at the Emirates Palace distracts from even greater imbalaces aongst the Gold-Card set.
Dubai is a house of cards on a planet that is looking like a US subdivision of such structures. My main point is that the Saudis and Gulfies may now see a better investment paradigm than bankrolling a US that will certainly continue to disappoint and blunder. If they fail, and Iran rises on its own might, then their fears of Teheran regional hegemony — either as a right-wing Shia or a Chinese-style state — may just materialise.
As is well noted, Gulf oil is a finite supply and some may be thinking it may be time to start teaching camels how to swim.
Posted by: WCM | December 8th, 2007 at 10:20 am | Report this commentHi RCS,
http://www.atimes.com/atimes/Middle_East/IL08Ak01.html
I think you’ll find the above article instructive.
Best,
P
Posted by: Pacifist | December 8th, 2007 at 3:11 pm | Report this commentDear P
I don’t see the connection with either the Gulf or Iranian persecution of minority groups (for the latter see for example here: http://www.bahai.org/persecution/iran
But if you insist on flinging articles, why not stick to the FT? For example:
http://www.ft.com/cms/s/0/4a1cba7e-a500-11dc-a93b-0000779fd2ac.html
For a good parody of the NIE, see here: http://www.economist.com/opinion/displaystory.cfm?story_id=10251997
Posted by: RCS | December 8th, 2007 at 4:01 pm | Report this commentHi RCS,
I only passed on the link to you as you are an Israeli and it is about the Israeli reaction to NIE. It would more properly belong under the Iran and the Bomb thread.
As for the Bahai’s, it is certainly off topic here. It is a dying cult within Iran but I am sure there are enough suckers in the US. After all there are Moonies, Mormons, Scientologists etc. so why shouldn’t the Bahai’s fleece the stupid Yanks?!
Finally, the Iraq-war supporting Economist would love a war on Iraq too and the only people who would be dismayed at the news of Iran NOT pursuing weaponisation must be those who love a war and are not peace-loving like me.
Niall Ferguson has a sensible article in today’s FT although he (very surprisingly) concludes that John McCain would be the best qualified future US president to negotiate a grand bargain with Iran.
Best,
P
Posted by: Pacifist | December 8th, 2007 at 5:57 pm | Report this commentDear P
I wouldn’t be surprised that the Baha’i faith is dying out in Iran, given the level of persecution. But I think ‘cult’ is an inappropriate term for a world religion of aprox. 6 million adherents. The faith, or its Babism forerunner, has real historic roots — it was a first reaction within Shi’ism to the encroachment of European modernism. So it is arrogant of you to wave it off-hand.
Your post highlights the difference between a tolerant society like America’s (where there is a profusion of faiths) and Iran’s (where only one is allowed). I know which I would prefer to be the dominant power in the Gulf.
Posted by: RCS | December 8th, 2007 at 7:37 pm | Report this commentP– Following on my account of Nepalese workers on a recent Muscat-Bahrain Gulf Air flight, I caught a report on al-Jazeera a few minutes ago about Nepalese workers being trafficked into Iraq, where they are not eligible for visas, and being employed by US security companies. The report is prompted by a recent set of executions of these workers.
Generally, I would not comment on FT op-eds, but as you brought it up, Ferguson’s piece seemed consistent with the sort of thing I would expect a Swyer-Miller to cook up. It’s logic is at a glance seductive and sounds a bit like the new paradigm I’ve toyed with in another thread. Far from it. Firstly, it presumes Iran requires US blessing or investment to thrive. Of course, the world works nicely when the US is not a contankerous obstacle, but the new paradigm presumes new dynamics and a declining US value.
Secondly, pitching war-hero McCain as the new Nixon seems a losing proposition. Only a fee could have justified Niall’s gratuitous lines.
Posted by: WCM | December 8th, 2007 at 8:53 pm | Report this commentAs I think this is the tip of a sad iceberg, I pass along this link on the Nepalese worker in Iraq story: http://english.aljazeera.net/NR/exeres/B067EC58-9A47-4EA6-B1CF-812EBF93023B.htm?FRAMELESS=true&NRNODEGUID=%7bB067EC58-9A47-4EA6-B1CF-812EBF93023B%7d
More needs to be told on these security companies. Good coverage began with the Blackwater fiasco a few months ago, but I suggest there are countless more players in what is a profitable game. Furthermore, it demonstrates again that the terms of war meted out in congresses/legislatures/parliaments are less and less relevant to what happens on the ground.
Posted by: WCM | December 9th, 2007 at 6:07 pm | Report this commentApologies that the previous post is not so obviously a part of this thread. I would suggest it is more so than appears, although such horrific accounts have not surfaced in the media out of the GCC countries. Local papers do report some dubious law enforcement acts against guest workers and, as the men I shared a flight with were on Gulf Air, I think it fits here.
Posted by: WCM | December 9th, 2007 at 6:11 pm | Report this commentDear WCM,
Thanks for the interesting link.
It is frightening that this paradise has its foundations in such hellish conditions.
Quote
Dubai Municipality recorded 34 deaths of construction workers at their workplaces in 2004 and 39 deaths in 2005. Independent research by a construction trade publication, Construction Week, found that a total of 880 migrant construction workers died in the UAE in 2004: 460 from India, 375 from Pakistan and approximately forty-five from Bangladesh
http://www.dailykos.com/storyonly/2007/12/8/182615/825/711/419312
Unquote
As for Ferguson, he is a notorious NeoCon. Maybe he wants McCain because McCain is the one who is the keenest to bomb Iran but the rest of his article was conciliatory. He is not in denial (prima facie) about the NIE
report on Iran which is a good starting point.
Best,
P
Posted by: Pacifist | December 10th, 2007 at 2:14 pm | Report this comment