Reflections on geo-political risk for regional business

The geo-political map of the Middle East has continued to change rapidly over the past week with some continental-sized shifts. These developments will directly influence the course and pattern of business in the wider region and GCC, and thus merit serious analysis by students and practitioners of business.

Yasser Arafat's death is a turning point in history, and clearly an opportunity to end the four-year Intifada and put the peace process back on the agenda.

Yesterday's statement from newly re-elected US President George W. Bush that he wants to achieve an independent Palestinian state within his four years in office is highly significant.

Any senior business person in the Middle East will tell you that the festering sore of Palestine is the biggest issue undermining peace and stability in the region. Solve this conundrum and you will lower the risk of doing business in the Middle East, and create an economic boom in the Levant.

This is the ultimate Middle East 'Win-Win' situation. However, walking down this particular road has never been easy. But possibly at this moment in time there is a unique conjunction of factors that may make it work. There is no need to state them - that is the business of politicians not businessmen.

Nonetheless, the situation in Iraq this week with the Iraqi and US forces in the final stages of removing foreign and local insurgents from Fallujah - whether justified or not - is also part of this end-game.

The pacification of Iraq under its interim government and the holding of elections in January should open up a new chapter in the history of Iraq. Business interests will note that this will also include a spectacular boom for the Iraq economy with huge foreign investment, just as soon as it is safe to do business there.

But you don't have to look far for 'replacement' geo-political risk factors. A widening of the War on Terror to other countries would again entail a major downside to business interests.

So who will be the winners if the Middle East becomes a much more peaceful place, and business can take advantage of lower operational risks and expand to meet the aspirations of the regional consumer?

Here predictions are much easier to make: Lowest cost producers, countries with the infrastructure to meet a sudden surge in business, multinationals with established bases in the region, service industries of all kinds, telecommunications companies, local groups that go regional quickly, real estate and equity investors, and the young people who will have a safe and prosperous future. Enjoy the Eid Al Fitr holiday, it's going to get hectic!