Significant Middle East business risks for 2005

History shows that false pride and arrogance are what brings business down. These attitudes are just one-step away from self-awareness and self-confidence which are both vital factors to any business success, so this is not an easy equation to balance.

Yet any business planner in the Middle East looking at 2005 should make this assessment: 'How much of our achievement in 2004 was really down to us? How much was down to booming oil prices? Can we sustain our success if oil prices trend down? Are we spending more cash than we have coming in?'

Of course, this is the straightforward part. Let us not forget the major Middle East geo-political hazards that should be listed in any 2005 business plan. Here is a list, and it is intended as a reminder to business and not a comment on the politics which can be left to those more qualified.

First, the attack on the US consulate in Jeddah last week is a reminder that the security situation in Saudi Arabia remains far from satisfactory. The elections early next year are intended to satisfy democratic aspirations. Let us hope this works.

Secondly, a peaceful end to Iran's pursuit of nuclear weapons is possible but the hawks in Washington are increasingly restive. Any military attack on Iran would provoke an immediate response, and massively hike business risk in the region, admittedly alongside the oil price which would achieve new highs.

Thirdly, the ongoing Iraqi insurgency may not be wrapped up after the elections in January, which is clearly what the optimists hope. There is still the risk that the conflict will widen to involve more parties in the region.

Last, but by no means least, the Palestinian leadership election looms. There is hope for a new beginning here, but any period of political change also has the potential to get out of control. Reforms can often have the reverse of the intended effect; let us hope that this is not true for the Palestinians.

Thus while Opec may be able to keep oil prices at elevated levels for some time, and the Cairo meeting last week seemed to demonstrate a reluctance to repeat the policy errors of 1998, there is plenty to keep business planners thinking about for 2005.

Pride so often comes before a fall. Look at the great business leaders in the past who have lost everything by getting too carried away in a boom.

That is not to say that 2005 will not prove to be a magnificent year for the Middle East - just be careful to spread your business risk and diversify, and keep an eye on the cash flow. Good basic business practice always wins.