The Middle East in 2004

That 2003 will have proven a turning point in Middle East history is undeniable, with the US-led invasion of Iraq a decisive event, the ramifications of which are still unraveling. High oil prices are a part of this story, and the underlying reason for an economic boom at a time of significant instability.

For 2004 the Middle East can hopefully look forward to a more peaceful year. Certainly there are no more major ground offensives by foreign powers in prospect. The Geneva Initiative, a ground-up, unofficial peace initiative also offers new hope for the resolution of the three year old uprising in the Palestinian territories.

And yet, terrorism remains a major threat. Expatriate compounds in Saudi Arabia are sand-bagged and guarded by tanks and in Iraq the US and its allies face daily casualties, albeit not of military significance to a huge occupying army. scale.

For business this means that the massive opportunity still represented by the rebuilding of Iraq remains tantalizingly out of reach. Who will send staff into a war zone to search for contracts?

In Saudi Arabia long-term expatriates are digging in to stay come what may, but the prospect of new foreign direct investment in such circumstances must be fairly bleak. However, the tough guys who run the energy companies may still take the plunge with new gas joint ventures in early 2004.

The wider threat of terrorism in the Middle East is no greater to business than Central London, and should not deter many companies from tapping opportunities in what will be the fifth year of an oil boom. Where will the prospects be brightest?

In brief the outlook is best in the Oil States, Kuwait, Qatar, Bahrain, and the UAE, with another year of high oil prices in prospect. Jordan is also likely to see further expansion due to special circumstances.

Kuwait benefits form its proximity to its old enemy and now natural business partner Iraq. There is also some prospect that Project Kuwait, a massive plan for foreign direct investment in the northern oilfields will finally see the light of day in 2004, but after 12 years of delay do not hold your breath.

Qatar will continue to reap the rich harvest of foreign direct investment, mainly in the gas sector. An open door to US investment and the US military combined with a commitment to elections in 2004, will serve Qatar well, and underpin an ongoing construction boom.

Similarly the UAE will still be pumping black gold and benefit from its enlightened approach to foreign direct investment. Dubai, in particular, is booming with real estate and free zones growing like mushrooms. The creation of the Dubai International Financial Centre and Dubai Metals and Commodities Centre will dramatically shift the focus on to the services centre in 2004.

Bahrain is struggling to maintain its status as the financial capital of the Middle East, but is striking back with the Bahrain Financial Harbour and the staging of the 2004 Grand Prix.

Overall, business prospects in the Middle East are booming. Even Iran is blossoming with high energy prices stimulating its moribund economy, and there is much talk of a swing towards a more reformist government. So 2004 will not be boring. It should be a more profitable and hopefully more peaceful year than 2003.