Geo-political shifts likely to influence regional outlook

First, US President George W. Bush was re-elected with a clear mandate supporting his foreign policy. This is a major blow to the hopes of many in the region who believed he might be replaced by his more conciliatory opponent.

Exactly what this means in foreign policy terms will become clearer in the next few months but tough action in Iraq in the run-up to the elections next year is a certainty.

For business this may suggest that the long-awaited boom in trade with Iraq is just around the corner, provided the newly elected Iraqi government proves up to the job or we may see a lot more violence yet.

Secondly, the Palestinian leader Yasser Arafat was rushed to hospital in Paris and looks close to death. The world now anxiously waits to see what happens next.

The optimistic view is that a new moderate leadership will end the four-year Intifada with a negotiated peace settlement. Again for business this would be good news, as Arab and foreign powers would probably pour money into the Palestinian territories.

We would also see the return of the long-lost Peace Dividend in the Middle East which did much to boost Arab economies in the mid to late 1990s. On the other hand, there is the possibility that the leaderless Palestinian territories may descend into anarchy and that would exacerbate their problems considerably.

Finally, last week saw the passing away of one of the region's greatest leaders, the UAE President Sheikh Zayed bin Sultan Al Nahyan and the accession of Crown Prince Khalifa bin Zayed Al Nahyan in his place.

Business is booming in the UAE, and the smooth change of President confirms the UAE as a safe haven for regional business. But the change is also symbolic of the ascendancy of a new generation committed to economic reform, which can only further boost the UAE's leadership in this regard.

However, we will all have to wait and see what the spectacular events of last week really portend for Middle East business.