May 21, 2025 • 32 mins
Host Stephanie Flanders, Bloomberg’s Head of Government and Economics, leads a panel from the Qatar Economic Forum in Doha to explore the question of what Trumponomics means for the Middle East. It turns out the answer may be—as Donald Trump would put it—a lot of winning.
Dina Esfandiary, Middle East geoeconomics lead for Bloomberg Economics, Ziad Daoud, chief emerging markets economist for Bloomberg Economics, and John Micklethwait, Bloomberg’s Editor in Chief, feature on the panel.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:17):
I'm Stephanie Flanders. I'm head of Government Economics at Bloomberg,
and welcome to trump Andomics, the podcast that looks at
the economic world of Donald Trump, how he's already shaped
the global economy, and what on earth is going to
happen next. This week, we're recording Trumponomics in front of
an audience from the Katar Economic Forum in Doha, and
(00:38):
we're asking the simple question, what does Trumpanomics mean for
the Middle East. It's the fifth Katar Economic Forum, and
the sessions theoretically have covered a very wide range of topics,
not just economics and finance, but the business of sport,
culture and the arts. But you couldn't help feeling, with
(01:00):
the event happening just a few days after President Donald
Trump's tour of this region, nearly all of the sessions,
and certainly many of the conversations here have also been
about Donald Trump what his policies mean for the region
and the world. We're recording this a few days into
the forum on Wednesday, May twenty first, and I'm keen
(01:24):
to take stock of some of those discussions we've been
having in the corridors and on the main stage, we
also think more broadly about not just Donald Trump's visit,
but longer term what the shift in the global landscape
he's engineering is going to mean for this part of
the world. My guests have been part of the conversations
(01:46):
here at the forum, and they've also, I think, been
doing some reflecting on their own. John Micklethwaite, Bloomberg's editor
in chief, and from our Bloomberg Economics team, Siad Dold,
chief Emerging Mark's economist, and Dinas Fandry, who's joined us
quite recently as the Middle East lead geoeconomics analyst. And
(02:08):
you were previously, Dina with the International Crisis Group. So
thanks very much all of you for joining me. See
that I'm going to start with you. We will get
into the visit in a minute, but I just wanted
to take a snapshot from you of how the global
economy looks today. If you're sitting here in Kata or
for that matter of Dubai, where you're based.
Speaker 3 (02:31):
I think you can summarize what's happened to the global
economy in two numbers four and two. The region gives
the world four things for inputs, and it gets from
the world. Two things. The region exports to the world.
Energy is a major energy producer. The region exports capital
to the world. The region is a major trade route
for the world. You talk about the Strait of Homers,
(02:54):
talk about the Strait of Babil Mandeb, we talk about
the Sewiz Canal.
Speaker 4 (02:58):
And the region provides also labor to the world.
Speaker 3 (03:01):
Currently provides about seven percent of the working age population
to the world. Because the region is young, because it's growing,
and because other parts of the world are aging, that
ratio is going to go up all the way to
eleven percent by the end of the century. So that's
what it gives to the world. What it gets from
the world as input to the economies. Here two things.
One the most important thing is all prices higher. All
(03:24):
prices are good for the region, and all prices have
gone down. And the second thing that the region gets
from the world is interest rates determines monetary policy here.
It determines borrowing costs, and it determines capital flows. And
this year, interest rates at least if you look at
the Fed funds rate or under way down, maybe slower
rate than the previously thought, but that's good for the region.
(03:47):
That's different from twenty twenty two when the US was
raising interest rates rapidly and some countries in the region
were exposed by that term, by that rapid increase in
monetary policy in the US.
Speaker 2 (03:58):
It's good to have that sort of the basic and
I like the idea of the inputs and outputs, Dina,
You're thinking more about the geopolitical inputs and outputs we've had.
Donald Trump's visit. We saw from a distance some of
the headlines, some of the enthusiasm around his trip, also
some of the stories that he will have been less
(04:18):
happy with. How important was it for the region.
Speaker 5 (04:21):
I think this trip was absolutely key for the region.
The Golfared States went through a period of difficulty politically
with Visa VI the US, and so Trump's trip last
week was kind of a re emergence of the golf
aub States, as it were for the countries here. Everybody
walked away from the trip a winner. Trump got what
(04:43):
he wanted, which was some of the economic deals that
he was gunning for, and the golfab States in return,
were able to showcase that they were open for business,
that they were here, that they were active, that their
economies were growing, that politically they were havens of stiff
ability in a region of instability, and all of that
was very important. And I think they also used this
(05:05):
as an opportunity to set perhaps some red lines or
at least some asks on the political side, things like,
you know, asking for the sanction lifting of sanctions on Syria,
setting some red lines in terms of what they would
be willing to accept in a US run potential nuclear deal.
So really just using it as an opportunity to outline
(05:27):
to the Trump administration what was important for them politically
and showcase this reinvigorated relationship with the US.
Speaker 2 (05:37):
And we did have some very big numbers coming out.
Every day was a new country and a new very
large number of billions, occasionally the odd trillion thrown in.
We know Donald Trump has a quite relaxed attitude to
these things. Do these governments take seriously those commitments?
Speaker 5 (05:54):
They take them seriously, yes, But I think what they
take more seriously is the ability to capture those headlines
with these huge figures, which is exactly what they did.
Some of these pledges aren't immediate, they're over the course
of ten years. Who knows what will happen between now
and ten years time, and.
Speaker 2 (06:10):
Who knows what you could include. I mean, Ziah, do
you have been just a bit of a reality check
on some of the past even Trump's first administration, some
of the promises that were made then.
Speaker 3 (06:20):
Yeah, So there's a qualitative element to it, but there's
a quantitative side to it. So the reason why I'm
skeptical whether these investments will be delivered this is multifold.
I think one is the fact that if you look
at the track record of what happened during Trump's first term,
he claimed that there was, for example, from Saudi Arabia,
four hundred and fifty billion dollars or purchases and investments.
(06:40):
I didn't do the numbers, but the former IMF mission
chief to Saudi did, and his conclusion was, if you
look at trade and if you look at investments, if
you add them all up, it's less than three hundred
billion dollars in the first time. Now, since then, the
region has been spending more domestically, and if you're spending
more domestically, there is less.
Speaker 4 (06:57):
To go abroad.
Speaker 3 (06:58):
So but luckily that they will be able to deliver
even a larger number is smaller. And the third thing
is the biggest economy in the region, Saudi Arabia has turned.
It's no longer an exporter of capital, is an importer
of capital. Saudi Arabia last year, when all was at
eighty dollars per barrel, was a net borrow from the world. Today,
when all was at sixty five, it's more likely to
(07:19):
be a borrow from the world. So if it wants
to invest six hundred billion dollars to the US, as
the White House says, there were commitments of that size
or even one trillion dollars that Donald Trump is chasing,
Saudi Araby needs to borrow first. That makes it unlucky
that they would actually deliver on these pig numbers.
Speaker 2 (07:34):
All right, Well, that is a kind of a bombshell
that I guess we'll also maybe come back to in
terms of the Saudi Arabia's changing standing. But John Michael Fay,
you know, like me, you're visiting the region for the forum.
We saw the coverage of the Trump visit. Probably you
had your own thoughts on how it had gone its importance,
But you know what surprised you actually being here the
(07:56):
last few days and how the Donald Trump Show is
playing in this region.
Speaker 6 (08:03):
I think a couple of very obvious things. The first
is if you come here again, if you come back here,
or we come back every year for the conference, you
see the way in which this region continues to add power,
both in the kind of long term way old enough
to remember when you thought about the Middle East and power,
you thought about countries like Egypt.
Speaker 4 (08:22):
Yes, in places like.
Speaker 6 (08:23):
Saudi Arabia were important for oil, but geopolitically Egypt seemed
more important. Now it's very much the Gulf. And you
can feel that both in terms of the people coming
here for money, basically because I think that is a
big element. People are coming here, many of the people
in this room, perhaps in order to get capital. That
(08:43):
is incredibly important and that's having a real impact. And
there is a slight difference I think between the UAE
and Cutter and Saudi Arabia because as you say, Saudi
Arabia no longer has as much to push out. So
there's an interesting dynamic in the people coming looking for money.
The second thing is just you know, the extraordinary personal
(09:03):
thing of Donald Trump, the fact that people queue up
to say they met him or that they talked to
him for one second, and where his car was parked
and all this stuff, and it is much more in
a weird way, like going back to a previous era
of royalty visiting a place. It's much more along that
(09:23):
line and a variety of somewhat spectacular promises. I think
probably people from countries that were colonized might remember this
in a different era about places like Britain, but where
promises are made but you're very unsure what they mean.
It's just much more exciting that the king Emperor has arrived,
and that's very much the sort of spirit of it
at the moment. But he has obviously had a very
(09:45):
big effect. As you said, everyone one that the interesting
question somehere at the back of that is Israel Gaza,
where it's harder to see where the red line is there.
Speaker 2 (09:55):
I want to get into some of those the deal
making on the geopolitical side that he I guess has
been somewhat less successful so far, at least in some areas,
but just on the sort of broader point, John, it
was quite fashionable before the election the US election last
year to say that this region would be relatively relaxed,
(10:15):
even non balance happier with a Trump victory because of
his quote unquote transactional approach to foreign policy, which we've
obviously seen play out. But I get the sense, and
certainly talking privately to some of the policymakers here at
this event and elsewhere, there was a nervousness actually about
the instability, and also people hankering a bit realizing the
(10:38):
value of a rule based system, even if they complained
about it. They didn't like American politicians American presidents lecturing
them about human rights and other things. The idea that
everything is now thrown up into the air is making
the leaders here nervous.
Speaker 4 (10:51):
I think that's very true.
Speaker 6 (10:53):
I think if you've talked to people behind the scenes, yes,
there is an enormous amount of what Trump did this,
Trump did that. There is also a worry, I think,
which is along the lines of the people in this
region have moved from a relationship based thing with America
to slightly more transaction based, and I think that is
(11:14):
very scary because and I've just come back from Asia
where you see exactly the same thing with places like
Japan and South Korea. If you look at Liberation Day,
what happened with tariffs, what happened with Zelenski in the
White House. If you are one of the people who
rely on America to support you. And I think in
(11:35):
this place, this region, you can talk about that, not
just in terms of countries, but in terms of families.
If you rely on America to be your ally, you
can't have an ally who's there eighty percent of the time.
You're either one hundred percent or it doesn't really count.
And I think what scared people about what happened in
the first bit of the Trump presidency was the idea
(11:58):
that that was all that negotiation, and I do think
there is that. So it's a mixture between this all
welcome the King stuff on the one hand, but then
this slight nervousness that he could change his mind dramatically
about things, and that I think here particularly from the
point of view the families who control a lot of
the power in this region, they really do rely on that,
(12:21):
and so that's where the nervousness comes from.
Speaker 2 (12:23):
So it's a reality check, because of course, is something
we've also heard from countries more broadly, what you might
call from a global south. You know, there have been
people privately saying, oh, it's it's a relief to have
the US be just as transactional, you know, and not
pretending to be anything that it isn't just a self
interested country like the rest of US, and we can
(12:43):
all sort of we can be we haven't rest from
the lectures, but there is a sting in the tale.
I mean, Tina, do you do you agree with Jonason?
Speaker 5 (12:52):
Yeah, broadly, yes, absolutely think. I think from the perspective
of the countries here, though this trend began even before
Trump Arguabie, right after the Arab Spring, it already appeared
as though the US wasn't as committed to the region,
So they've had a long time to adjust to what
they perceived to be a US pivoting.
Speaker 4 (13:12):
Away from the America never famously saved m. Barrack day exactly.
Speaker 5 (13:17):
That's exactly right, And so I think on the one hand,
they're used to it and they almost appreciate, like you said,
this transactional approach that the Trump administration now has. But
on the other hand, they're afraid because he's unpredictable, he's unreliable.
On the one hand, he might listen to them and
they might have his ear immediately after a visit where
everything goes well and ten minutes later things will change.
Speaker 2 (13:40):
Just as we should also sort of take off some
of the big things that happened, and I think you politically,
a very significant thing that happened during the visit was
the normalization of relations with Syria, I mean, Dina. What's
the impact of that and the importance of that for
the region.
Speaker 5 (13:56):
It's absolutely huge. The new Syrian government would have had
no hope of any gross, any development, any stability had
it not been for the sanctions relief. But the announcement
of sanctions relief is not quite the same thing as
the implementation of sanctions relief, and sanctions on Syria are
multi layered, incredibly complicated, and their removal requires many different
(14:21):
people in the US to be on board with it,
many different institutions in the US to okay it, and
it will require real commitment on the part of a
Trump administration. So it remains to be seen just how
committed this administration will be to actually lifting all the
sanctions in the next few months.
Speaker 2 (14:39):
See what's the economic impact of normalizations Syria and who
are the sort of winners economically in the region from it?
Speaker 3 (14:46):
In terms of general economic impact is probably limited. Serious
economy is not very large, and it doesn't have much
spillover to the rest of the region, but there are winners.
So if you think about, for example, Turkey, Turkey has
political and cents in Syria. Under the new government, you'd
think that Turkish construction companies will be involved in the
reconstruction of Syria, which is probably gonn if the bill
(15:08):
could be in millions of dollars and it may benefit
from this. I think with respect to Syria, when it
comes to Syria and what happened in Syria, it just
tells you something also about what's happening in the broader region,
because I think when people look at the region today
and they read the history of the region today or
write the history of the region today, they're not going
to say, look, there were a bunch of protests in
(15:30):
the Arab world in two thousand and eleven, and there's
another waive of protests in twenty nineteen in Abanon, in
Iraq and Algeria and Sudan, and that every Arab republic
had popular protests since twenty and eleven, leading to toppling
of governments in some places, and then we had COVID
and then we had the war in twenty three and
twenty four, and up to today, they'll think there's a
(15:52):
whole period of instability. There's something in the region that
is politically probably is just simmering. You had the popular protest,
which signals dissatisfaction. Economically, if you look at many countries
in the region, their gdpeople CAPTA today is lower than
twenty thirteen, so it's almost the last decade of economic growth.
(16:13):
And you see that in Egypt, you see that in Iraq,
you see that place of Jordan, Tunisia, Iran, and then
you see what happened in Syria. But there's a sudden
change out of nowhere and then obviously the war, and
there is the whole level of anger in the region
that's not expressing yourself. So you have this political instability
risks in the region which hasn't quite manifested it self.
(16:34):
We saw an element of that in Syria, of with
what happened in Syria in December, but we haven't seen
it in the rest of the region.
Speaker 2 (16:41):
Dina, I mean, I feel like it's sort of crazy
to be going through these things so rapidly, but we
don't have a huge amount of time. And something that
the president has talked up a lot is a nuclear
deal with Iran, but not much sign of progress and actually,
as we're recording this, there is also the sort of
leaks out of the US about potential shill create a
tension and potential attacks between Israel and Iran. So how
(17:04):
do you see that?
Speaker 1 (17:06):
So, I think it's already good news that they've had
several rounds of negotiations, some almost direct, kind of direct,
and some involving Omani mediators and now increasing li Katari mediators.
Speaker 5 (17:18):
I think the momentum is there also good news. But
there does seem to be a lot of public positioning
on both sides in the media, and all of that
is pretty standard for this type of negotiation. I do
think this is a unique opportunity where both the Trump
administration and the administration in Iran want a deal, and
that hasn't always matched in the past. And we are
(17:40):
faced with the US president who is capable of bulldozing
through and getting a deal, which perhaps in the past
we had, but the implementation of the deal was somewhat shaky,
and of course the same president left the previous nuclear
deal as well.
Speaker 4 (17:55):
There's also a lot.
Speaker 5 (17:56):
Of effort on the part of the Iranians and the
Americans to brief regional players, players like Russia, and China
to get them on board, to make sure everybody is
on the same page. And again that really does count
for something, so everybody feels involved in these talks. The
real question, though, is what is the US ask and
(18:16):
what does the US ask on enrichment? And this is
where we've seen a little bit of flip flopping on
the American side between asking for complete dismantlement of the Iran's
program or accepting a certain amount of enrichment. But obviously
in a limited capacity, complete dismantlement is just off the
table for Iran. They won't agree to it. If the
Americans are able to accept some kind of enrichment, then
(18:40):
I do think the likelihood of a deal is actually
quite high because both sides want it, and both sides
need the win.
Speaker 2 (18:47):
Just to follow up on that. I mean, one of
the things, one of the reasons it matters, if you're
just thinking in kind of optical terms for the administration,
is it's the difference between having a deal that's quite
different from the Obama deal and have a deal that's
actually very similar. Do you think that's going to be fundamental?
Speaker 5 (19:06):
I do think that President Trump just wants the win
and coming back with a deal is a win no
matter what's in it. So I don't think despite the
fact that they did make a big deal out of
the previous deal and not wanting this one to be
the same. I don't think that this administration is dead
set on making sure this is very different. They are
(19:26):
just dead set on achieving this agreement with Iran. There
are two things, though, in the deal that sound like
they are going to be somewhat different to the previous one.
The first is this idea that there may not be
any sunset closes, so an end date to the agreement.
It appears that there's been discussion about this, and it
appears that there's been at least some agreement on it,
and that's very different to the Obama administration's nuclear deal.
(19:49):
The second thing is there appears to be an Iranian
willingness to talk about its regional presence. I myself was
taken aback when I heard the Supreme Leader say this,
because it seems like Iran was only going to focus
on a nuclear deal. But if there is willingness on
the Iranian part to talk about its regional presence, then
that fundamentally changes this agreement.
Speaker 6 (20:10):
Did you think that makes a difference to instability because
I thought, well, theod was talking. If you were looking
at the outputs for this region in a slightly more
geopolitical way, you would say, one of the great outputs
over the past however long you want to take, has
been instability, which has ricocheted around the world in various
(20:30):
ways of extremism and protests and also just difficulties and
the moment that you could argue massively generalizing, but there
are kind of two things slightly at the middle of it.
There's Israel and Gaza, and there's Iran. Is there a
chance because of all these machinations, however you put them,
that actually you end up with a more stable regime
(20:53):
and that element of the Middle East is changed.
Speaker 5 (20:57):
The issue is that Iran's relationship with its proxies in
the region and the network of partnerships that it's built
in the region really is its crown rules. It's its
single most successful foreign policy endeavor as the Islamic Republic.
So it's very important to it. Now it has suffered
a blow. For sure, it is weakened, although I would
(21:18):
argue it's not weak because it's a temporary thing, not
a permanent thing. But this is significant to Iran, and
it would have to gain a lot of security in
order to give that up. Would such a deal give
it that security. I think a deal with Trump's America
would give it legitimacy for sure. And what happens after
(21:39):
the deal, I think is what's critical to determining how
much Iran is willing to give up some of these partnerships.
If Iran really does see the benefits of the deal,
if for example, you could foresee a potential Islamic republic
that is more integrated economically in the region, an ideal
that a lot of the golf Arab states are trying
to sell to Iran. If it can be reintegrated, if
(22:00):
it's no longer isolated, then it means the regime has
an interest in staying integrated and perhaps giving up some
of those relationships. I don't think it'll be easy, and
it certainly won't be the first thing that happens, but
I do think it's it's a potential scenario.
Speaker 2 (22:18):
John, you mentioned at the start something that we should
you know, people listening. Although it's called Trumpnomics, obviously we're
listening to this show at the same in the same
week that international pressure is mounting on Israel, and the
UK government has taken some steps, and there's been an
alliance of other countries who've also attempted to put more
pressure on Israel regarding the situation in Gaza. That's the
(22:40):
other wrinkle, surely in your story about having greater prospects
for stability here.
Speaker 4 (22:47):
Yes, that was That's what I was asking about as well.
Speaker 6 (22:50):
Most people would say those two things, Israeli Palestinian dispute
and the Iranian that those have been at the bottom
of most of the elements about what has made this
a difficult region.
Speaker 4 (23:02):
For outside powers to deal with.
Speaker 6 (23:05):
You might argue interfere with and cause things, but those
those are the two things, and without a solution on those,
and I think neither Iran. Weirdly seems a little bit
closer to some kind of deal than what seems possible
in Israel Palace.
Speaker 2 (23:20):
But with all this talk of deals again, it does
seem like the sort of parallel tracks we've had a
you know, several weeks of talking about big numbers and
emerging great relationships between the US and the Middle East
and in the Gulf nations at the same time as
this continued drama is playing out and even deepening in
some ways around the situation in Gaza. And the mistake,
(23:42):
some would say, of the first Trump administration was this
idea that you could have the Abraham Accords, that you
could be moving towards a more peaceful place, just hoping
that that dispute would go away. And on October seventh,
everyone said, but we mustn't make that mistake again. The
problem is now still front and center. But Dina Zi,
but it doesn't. It feels like we're still talking around
(24:02):
it in forums like this and in more geopolitical settings.
Speaker 5 (24:07):
Absolutely, the problem is the Israel Palestinian problem is such
an endemic issue to the Middle East. It's so complicated,
it's long standing, and it's just years and years and
years of animosity and now several years of devastating conflict.
It's difficult to pick that apart. But you're absolutely right
to say that there will be no stability in the
(24:28):
region long term if you don't resolve this conflict. This
will always form the context in the backdrop to any
attempt at stability. And the problem is in the last
few years that this conflict has raged on, it has
engulfed the entire region. So we're no longer talking about
a limited conflict that covers just Israel and the Palestinian territories.
(24:48):
We're now talking about something that has drawn in Lebanon,
it's drawn in Iran, it's drawn in the Gulf Arab states,
because they're trying to mediate it. So there is no
prospect stability without resolving the Gaza conflict, and right now
there doesn't seem to be a lot of hope for
resolving the conflict.
Speaker 2 (25:05):
At the broadest level that the conflict it's not just
many years, it's now entering its second century, which is
worth reflecting on. Because we're Trumpenomics, we're going to do
a quick turn back into economics before we end, which
means I'm looking at Uziad and can't help being struck.
You mentioned it at the start. You know, there's one
(25:28):
big change, which is that Saudi Arabia is now a
capital importer, is now borrowing from the rest of the
world to fund all its domestic investments. It's not necessarily
and they be able to have this big checkbook, even
though there was lots of talk of money last week.
I would say for the outside observer, for many people
in the world, Saudi Arabia's actually feels bigger. You know,
(25:48):
it has the greater sort of geopolitical standing now and
John mentioned it in passing as well. But you would
say as an economist, that's happening, that great place on
the world stage is happening as it's economics is actually
becoming weaker and weaker. Is that is that fair?
Speaker 3 (26:04):
Weaker and weaker in the census, providing less capital to
the world. But just just take a step back. This region,
the Gulf countries are incredibly rich. Just perspective. If you
look at Kata where we are today, Kata has about
two eight hundred billion dollars of assets are broad of
external asses. If it decides to liquidate then tomorrow and
distribute to the citizens equally, there's fewer than four hundred
(26:26):
thousand quatter is here. Each cuttery citizen could wake up
next morning with two million dollars a millionaire. You do
the same calculations for the EAE again, the same num
almost the same number, two million dollars again for every
citizen Saudi, because it's significant how the common wealth, but
the population is much larger to twenty million in Saudi's.
So we're talking about sixty thousand dollars per citizens, a
(26:46):
significant amount of money, but the region is not into
that business of liquidating and distributing. They use that wealth
to try and generate economic reterm, They use that wealth
for economic diplomacy, and they use that wealth to generates
soft power. But in the context of a very rich region,
something is changing, and that something is changing the amanda's
topping up every year to that wealth continues to be
(27:10):
positive in Kuwait in the UAE and on Cottact, but
it's negative now in Saldi. That changed last year. As
I said, when aill is are eighty, which is surprising,
that is set to continue when all is lower and
if you look at the arm of projection, as they
expect that to continue all the way out to twenty thirty.
And it just means Saldi has a choice. It has
(27:30):
a choice to spend less at home and try and
stay more abroad. That's one one choice. The other one
is to borrow more from broad to fund all the spending.
And the third thing is to draw on this wealth
that it has accumulated, and that could give a citizen
sixty thousand dollars. And I think this is a choice
that Saldi policy makers need to face in the coming
(27:51):
years and probably need to make a decision on that.
Speaker 2 (27:53):
And if you think about the world we have, you know,
a world in which the dollars lower but the oil
price is lower. But also people are potentially looking to
move money out of the US or orient or sort
of hedge their bets against either the US or China,
you know, wanting to be in the sort of you know,
(28:15):
play both sides. This region benefits from that. Are there
particular countries that benefit from that?
Speaker 3 (28:21):
It could potentially benefit from this. Despite working as an
economists have to make projections about the future. I look
at the past and extrapolate. So far, foreign direct investment
in the region has not been significant.
Speaker 4 (28:33):
Will things change. Possibly.
Speaker 3 (28:35):
I'm not smart enough to make that forecast two years out,
but right now and if you look at Saudi for example,
foreign direct investment into Saudi has been falling since twenty
twenty one, so yes, this things could change. I was
away on sabbatical last year because you approved there and
John approved it. And the point I'm trying to make
is twenty percent of my office hours were people coming
(28:56):
to me asking how they could get jobs in the
Gulf from.
Speaker 2 (29:00):
People and I should say your Harvard students were saying that.
Speaker 6 (29:03):
But the interesting thing about that, if you want a
kind of dinner party version of having been to a
variety of meals, here the number of people who were
thinking of sending their children to US universities who are
now reconsidering. You could argue that that is one of
the biggest sort of changes in terms of what Liberation
(29:23):
Day may have done to people's views of America.
Speaker 4 (29:26):
With a slightly ancillary.
Speaker 6 (29:27):
Thing about people being slightly more reluctant to go to
London for tax reasons, that kind of thing actually does
have a long term impact.
Speaker 2 (29:35):
I mean, Dina, I think certainly listened to some of
the things that we've been saying, and particularly what John
was saying about America's different stance with respect to the
rest of the world and how people are reacting to it.
Probably the world as a whole as a loser from
having America sort of step back from its previous role
and be much more transactional, but understanding that there still
(30:00):
be relative winners and losers from this new global order
or disorder. Do you feel that in your gut that
sort of Middle East will be or the Gulf region
at least will be a relative winner.
Speaker 5 (30:12):
I was just about to say, it depends what part
of the Middle East you're talking about. I do think
that the Gulf is well positioned to be a winner,
certainly with this administration. They are and they represent and
they present themselves to be everything that the Trump administration likes.
The glitz, the glamor the money. All of these things
are very attractive to this administration and it works, and
(30:34):
so I do think that they're in a position to win.
But they can only win, as we said earlier, if
there is greater stability in the whole Middle East region,
and it really can only go one of two ways.
The Trump administration can either bulldoze through some of the
things that we've seen in the last few years, get
to agreements, fast agreements, but agreements that are implemented if
(30:55):
they are committed to achieving some of their foreign policy objectives,
in which case we may actually see greater stability in
the Middle East. Or it will make these great statements
and not implement them afterwards. And if that happens, then
the region will just be as unstable as it is now.
Speaker 2 (31:11):
It's a very superficial response, but from what you were
saying did make me think a little bit the surface
glitz these amazing hotels, But every conversation I've had with
people this week has been about different elements of their
very swanky hotel room that didn't quite work. And I
can't help thinking, you need the glitz, but you also
need the showers that work, and I guess in your
(31:33):
context you need the underlying social and human infrastructure to
be in place as well.
Speaker 3 (31:38):
Well.
Speaker 2 (31:38):
I think that's an excellent place on which to end.
But John Dino Ziah, thank you very much, So we're
going to get to John, did you want to get
a last word? You were looking at me meaningfully. Check
if the boss wants to get the last words, I
think now.
Speaker 4 (31:58):
When we ended on the showers.
Speaker 6 (32:00):
More to add.
Speaker 2 (32:18):
Thanks for listening to Trumponomics from Bloomberg. It was hosted
by me Stephanie Flanders, and I was joined by John,
Michelfwaite Z DoD and Dina Esfandre. With special thanks to
the team at the Katan Economic Forum.
Bloomberg Audio Studios, Podcasts, radio News.
Speaker 2 (00:17):
I'm Stephanie Flanders. I'm head of Government Economics at Bloomberg,
and welcome to trump Andomics, the podcast that looks at
the economic world of Donald Trump, how he's already shaped
the global economy, and what on earth is going to
happen next. This week, we're recording Trumponomics in front of
an audience from the Katar Economic Forum in Doha, and
(00:38):
we're asking the simple question, what does Trumpanomics mean for
the Middle East. It's the fifth Katar Economic Forum, and
the sessions theoretically have covered a very wide range of topics,
not just economics and finance, but the business of sport,
culture and the arts. But you couldn't help feeling, with
(01:00):
the event happening just a few days after President Donald
Trump's tour of this region, nearly all of the sessions,
and certainly many of the conversations here have also been
about Donald Trump what his policies mean for the region
and the world. We're recording this a few days into
the forum on Wednesday, May twenty first, and I'm keen
(01:24):
to take stock of some of those discussions we've been
having in the corridors and on the main stage, we
also think more broadly about not just Donald Trump's visit,
but longer term what the shift in the global landscape
he's engineering is going to mean for this part of
the world. My guests have been part of the conversations
(01:46):
here at the forum, and they've also, I think, been
doing some reflecting on their own. John Micklethwaite, Bloomberg's editor
in chief, and from our Bloomberg Economics team, Siad Dold,
chief Emerging Mark's economist, and Dinas Fandry, who's joined us
quite recently as the Middle East lead geoeconomics analyst. And
(02:08):
you were previously, Dina with the International Crisis Group. So
thanks very much all of you for joining me. See
that I'm going to start with you. We will get
into the visit in a minute, but I just wanted
to take a snapshot from you of how the global
economy looks today. If you're sitting here in Kata or
for that matter of Dubai, where you're based.
Speaker 3 (02:31):
I think you can summarize what's happened to the global
economy in two numbers four and two. The region gives
the world four things for inputs, and it gets from
the world. Two things. The region exports to the world.
Energy is a major energy producer. The region exports capital
to the world. The region is a major trade route
for the world. You talk about the Strait of Homers,
(02:54):
talk about the Strait of Babil Mandeb, we talk about
the Sewiz Canal.
Speaker 4 (02:58):
And the region provides also labor to the world.
Speaker 3 (03:01):
Currently provides about seven percent of the working age population
to the world. Because the region is young, because it's growing,
and because other parts of the world are aging, that
ratio is going to go up all the way to
eleven percent by the end of the century. So that's
what it gives to the world. What it gets from
the world as input to the economies. Here two things.
One the most important thing is all prices higher. All
(03:24):
prices are good for the region, and all prices have
gone down. And the second thing that the region gets
from the world is interest rates determines monetary policy here.
It determines borrowing costs, and it determines capital flows. And
this year, interest rates at least if you look at
the Fed funds rate or under way down, maybe slower
rate than the previously thought, but that's good for the region.
(03:47):
That's different from twenty twenty two when the US was
raising interest rates rapidly and some countries in the region
were exposed by that term, by that rapid increase in
monetary policy in the US.
Speaker 2 (03:58):
It's good to have that sort of the basic and
I like the idea of the inputs and outputs, Dina,
You're thinking more about the geopolitical inputs and outputs we've had.
Donald Trump's visit. We saw from a distance some of
the headlines, some of the enthusiasm around his trip, also
some of the stories that he will have been less
(04:18):
happy with. How important was it for the region.
Speaker 5 (04:21):
I think this trip was absolutely key for the region.
The Golfared States went through a period of difficulty politically
with Visa VI the US, and so Trump's trip last
week was kind of a re emergence of the golf
aub States, as it were for the countries here. Everybody
walked away from the trip a winner. Trump got what
(04:43):
he wanted, which was some of the economic deals that
he was gunning for, and the golfab States in return,
were able to showcase that they were open for business,
that they were here, that they were active, that their
economies were growing, that politically they were havens of stiff
ability in a region of instability, and all of that
was very important. And I think they also used this
(05:05):
as an opportunity to set perhaps some red lines or
at least some asks on the political side, things like,
you know, asking for the sanction lifting of sanctions on Syria,
setting some red lines in terms of what they would
be willing to accept in a US run potential nuclear deal.
So really just using it as an opportunity to outline
(05:27):
to the Trump administration what was important for them politically
and showcase this reinvigorated relationship with the US.
Speaker 2 (05:37):
And we did have some very big numbers coming out.
Every day was a new country and a new very
large number of billions, occasionally the odd trillion thrown in.
We know Donald Trump has a quite relaxed attitude to
these things. Do these governments take seriously those commitments?
Speaker 5 (05:54):
They take them seriously, yes, But I think what they
take more seriously is the ability to capture those headlines
with these huge figures, which is exactly what they did.
Some of these pledges aren't immediate, they're over the course
of ten years. Who knows what will happen between now
and ten years time, and.
Speaker 2 (06:10):
Who knows what you could include. I mean, Ziah, do
you have been just a bit of a reality check
on some of the past even Trump's first administration, some
of the promises that were made then.
Speaker 3 (06:20):
Yeah, So there's a qualitative element to it, but there's
a quantitative side to it. So the reason why I'm
skeptical whether these investments will be delivered this is multifold.
I think one is the fact that if you look
at the track record of what happened during Trump's first term,
he claimed that there was, for example, from Saudi Arabia,
four hundred and fifty billion dollars or purchases and investments.
(06:40):
I didn't do the numbers, but the former IMF mission
chief to Saudi did, and his conclusion was, if you
look at trade and if you look at investments, if
you add them all up, it's less than three hundred
billion dollars in the first time. Now, since then, the
region has been spending more domestically, and if you're spending
more domestically, there is less.
Speaker 4 (06:57):
To go abroad.
Speaker 3 (06:58):
So but luckily that they will be able to deliver
even a larger number is smaller. And the third thing
is the biggest economy in the region, Saudi Arabia has turned.
It's no longer an exporter of capital, is an importer
of capital. Saudi Arabia last year, when all was at
eighty dollars per barrel, was a net borrow from the world. Today,
when all was at sixty five, it's more likely to
(07:19):
be a borrow from the world. So if it wants
to invest six hundred billion dollars to the US, as
the White House says, there were commitments of that size
or even one trillion dollars that Donald Trump is chasing,
Saudi Araby needs to borrow first. That makes it unlucky
that they would actually deliver on these pig numbers.
Speaker 2 (07:34):
All right, Well, that is a kind of a bombshell
that I guess we'll also maybe come back to in
terms of the Saudi Arabia's changing standing. But John Michael Fay,
you know, like me, you're visiting the region for the forum.
We saw the coverage of the Trump visit. Probably you
had your own thoughts on how it had gone its importance,
But you know what surprised you actually being here the
(07:56):
last few days and how the Donald Trump Show is
playing in this region.
Speaker 6 (08:03):
I think a couple of very obvious things. The first
is if you come here again, if you come back here,
or we come back every year for the conference, you
see the way in which this region continues to add power,
both in the kind of long term way old enough
to remember when you thought about the Middle East and power,
you thought about countries like Egypt.
Speaker 4 (08:22):
Yes, in places like.
Speaker 6 (08:23):
Saudi Arabia were important for oil, but geopolitically Egypt seemed
more important. Now it's very much the Gulf. And you
can feel that both in terms of the people coming
here for money, basically because I think that is a
big element. People are coming here, many of the people
in this room, perhaps in order to get capital. That
(08:43):
is incredibly important and that's having a real impact. And
there is a slight difference I think between the UAE
and Cutter and Saudi Arabia because as you say, Saudi
Arabia no longer has as much to push out. So
there's an interesting dynamic in the people coming looking for money.
The second thing is just you know, the extraordinary personal
(09:03):
thing of Donald Trump, the fact that people queue up
to say they met him or that they talked to
him for one second, and where his car was parked
and all this stuff, and it is much more in
a weird way, like going back to a previous era
of royalty visiting a place. It's much more along that
(09:23):
line and a variety of somewhat spectacular promises. I think
probably people from countries that were colonized might remember this
in a different era about places like Britain, but where
promises are made but you're very unsure what they mean.
It's just much more exciting that the king Emperor has arrived,
and that's very much the sort of spirit of it
at the moment. But he has obviously had a very
(09:45):
big effect. As you said, everyone one that the interesting
question somehere at the back of that is Israel Gaza,
where it's harder to see where the red line is there.
Speaker 2 (09:55):
I want to get into some of those the deal
making on the geopolitical side that he I guess has
been somewhat less successful so far, at least in some areas,
but just on the sort of broader point, John, it
was quite fashionable before the election the US election last
year to say that this region would be relatively relaxed,
(10:15):
even non balance happier with a Trump victory because of
his quote unquote transactional approach to foreign policy, which we've
obviously seen play out. But I get the sense, and
certainly talking privately to some of the policymakers here at
this event and elsewhere, there was a nervousness actually about
the instability, and also people hankering a bit realizing the
(10:38):
value of a rule based system, even if they complained
about it. They didn't like American politicians American presidents lecturing
them about human rights and other things. The idea that
everything is now thrown up into the air is making
the leaders here nervous.
Speaker 4 (10:51):
I think that's very true.
Speaker 6 (10:53):
I think if you've talked to people behind the scenes, yes,
there is an enormous amount of what Trump did this,
Trump did that. There is also a worry, I think,
which is along the lines of the people in this
region have moved from a relationship based thing with America
to slightly more transaction based, and I think that is
(11:14):
very scary because and I've just come back from Asia
where you see exactly the same thing with places like
Japan and South Korea. If you look at Liberation Day,
what happened with tariffs, what happened with Zelenski in the
White House. If you are one of the people who
rely on America to support you. And I think in
(11:35):
this place, this region, you can talk about that, not
just in terms of countries, but in terms of families.
If you rely on America to be your ally, you
can't have an ally who's there eighty percent of the time.
You're either one hundred percent or it doesn't really count.
And I think what scared people about what happened in
the first bit of the Trump presidency was the idea
(11:58):
that that was all that negotiation, and I do think
there is that. So it's a mixture between this all
welcome the King stuff on the one hand, but then
this slight nervousness that he could change his mind dramatically
about things, and that I think here particularly from the
point of view the families who control a lot of
the power in this region, they really do rely on that,
(12:21):
and so that's where the nervousness comes from.
Speaker 2 (12:23):
So it's a reality check, because of course, is something
we've also heard from countries more broadly, what you might
call from a global south. You know, there have been
people privately saying, oh, it's it's a relief to have
the US be just as transactional, you know, and not
pretending to be anything that it isn't just a self
interested country like the rest of US, and we can
(12:43):
all sort of we can be we haven't rest from
the lectures, but there is a sting in the tale.
I mean, Tina, do you do you agree with Jonason?
Speaker 5 (12:52):
Yeah, broadly, yes, absolutely think. I think from the perspective
of the countries here, though this trend began even before
Trump Arguabie, right after the Arab Spring, it already appeared
as though the US wasn't as committed to the region,
So they've had a long time to adjust to what
they perceived to be a US pivoting.
Speaker 4 (13:12):
Away from the America never famously saved m. Barrack day exactly.
Speaker 5 (13:17):
That's exactly right, And so I think on the one hand,
they're used to it and they almost appreciate, like you said,
this transactional approach that the Trump administration now has. But
on the other hand, they're afraid because he's unpredictable, he's unreliable.
On the one hand, he might listen to them and
they might have his ear immediately after a visit where
everything goes well and ten minutes later things will change.
Speaker 2 (13:40):
Just as we should also sort of take off some
of the big things that happened, and I think you politically,
a very significant thing that happened during the visit was
the normalization of relations with Syria, I mean, Dina. What's
the impact of that and the importance of that for
the region.
Speaker 5 (13:56):
It's absolutely huge. The new Syrian government would have had
no hope of any gross, any development, any stability had
it not been for the sanctions relief. But the announcement
of sanctions relief is not quite the same thing as
the implementation of sanctions relief, and sanctions on Syria are
multi layered, incredibly complicated, and their removal requires many different
(14:21):
people in the US to be on board with it,
many different institutions in the US to okay it, and
it will require real commitment on the part of a
Trump administration. So it remains to be seen just how
committed this administration will be to actually lifting all the
sanctions in the next few months.
Speaker 2 (14:39):
See what's the economic impact of normalizations Syria and who
are the sort of winners economically in the region from it?
Speaker 3 (14:46):
In terms of general economic impact is probably limited. Serious
economy is not very large, and it doesn't have much
spillover to the rest of the region, but there are winners.
So if you think about, for example, Turkey, Turkey has
political and cents in Syria. Under the new government, you'd
think that Turkish construction companies will be involved in the
reconstruction of Syria, which is probably gonn if the bill
(15:08):
could be in millions of dollars and it may benefit
from this. I think with respect to Syria, when it
comes to Syria and what happened in Syria, it just
tells you something also about what's happening in the broader region,
because I think when people look at the region today
and they read the history of the region today or
write the history of the region today, they're not going
to say, look, there were a bunch of protests in
(15:30):
the Arab world in two thousand and eleven, and there's
another waive of protests in twenty nineteen in Abanon, in
Iraq and Algeria and Sudan, and that every Arab republic
had popular protests since twenty and eleven, leading to toppling
of governments in some places, and then we had COVID
and then we had the war in twenty three and
twenty four, and up to today, they'll think there's a
(15:52):
whole period of instability. There's something in the region that
is politically probably is just simmering. You had the popular protest,
which signals dissatisfaction. Economically, if you look at many countries
in the region, their gdpeople CAPTA today is lower than
twenty thirteen, so it's almost the last decade of economic growth.
(16:13):
And you see that in Egypt, you see that in Iraq,
you see that place of Jordan, Tunisia, Iran, and then
you see what happened in Syria. But there's a sudden
change out of nowhere and then obviously the war, and
there is the whole level of anger in the region
that's not expressing yourself. So you have this political instability
risks in the region which hasn't quite manifested it self.
(16:34):
We saw an element of that in Syria, of with
what happened in Syria in December, but we haven't seen
it in the rest of the region.
Speaker 2 (16:41):
Dina, I mean, I feel like it's sort of crazy
to be going through these things so rapidly, but we
don't have a huge amount of time. And something that
the president has talked up a lot is a nuclear
deal with Iran, but not much sign of progress and actually,
as we're recording this, there is also the sort of
leaks out of the US about potential shill create a
tension and potential attacks between Israel and Iran. So how
(17:04):
do you see that?
Speaker 1 (17:06):
So, I think it's already good news that they've had
several rounds of negotiations, some almost direct, kind of direct,
and some involving Omani mediators and now increasing li Katari mediators.
Speaker 5 (17:18):
I think the momentum is there also good news. But
there does seem to be a lot of public positioning
on both sides in the media, and all of that
is pretty standard for this type of negotiation. I do
think this is a unique opportunity where both the Trump
administration and the administration in Iran want a deal, and
that hasn't always matched in the past. And we are
(17:40):
faced with the US president who is capable of bulldozing
through and getting a deal, which perhaps in the past
we had, but the implementation of the deal was somewhat shaky,
and of course the same president left the previous nuclear
deal as well.
Speaker 4 (17:55):
There's also a lot.
Speaker 5 (17:56):
Of effort on the part of the Iranians and the
Americans to brief regional players, players like Russia, and China
to get them on board, to make sure everybody is
on the same page. And again that really does count
for something, so everybody feels involved in these talks. The
real question, though, is what is the US ask and
(18:16):
what does the US ask on enrichment? And this is
where we've seen a little bit of flip flopping on
the American side between asking for complete dismantlement of the Iran's
program or accepting a certain amount of enrichment. But obviously
in a limited capacity, complete dismantlement is just off the
table for Iran. They won't agree to it. If the
Americans are able to accept some kind of enrichment, then
(18:40):
I do think the likelihood of a deal is actually
quite high because both sides want it, and both sides
need the win.
Speaker 2 (18:47):
Just to follow up on that. I mean, one of
the things, one of the reasons it matters, if you're
just thinking in kind of optical terms for the administration,
is it's the difference between having a deal that's quite
different from the Obama deal and have a deal that's
actually very similar. Do you think that's going to be fundamental?
Speaker 5 (19:06):
I do think that President Trump just wants the win
and coming back with a deal is a win no
matter what's in it. So I don't think despite the
fact that they did make a big deal out of
the previous deal and not wanting this one to be
the same. I don't think that this administration is dead
set on making sure this is very different. They are
(19:26):
just dead set on achieving this agreement with Iran. There
are two things, though, in the deal that sound like
they are going to be somewhat different to the previous one.
The first is this idea that there may not be
any sunset closes, so an end date to the agreement.
It appears that there's been discussion about this, and it
appears that there's been at least some agreement on it,
and that's very different to the Obama administration's nuclear deal.
(19:49):
The second thing is there appears to be an Iranian
willingness to talk about its regional presence. I myself was
taken aback when I heard the Supreme Leader say this,
because it seems like Iran was only going to focus
on a nuclear deal. But if there is willingness on
the Iranian part to talk about its regional presence, then
that fundamentally changes this agreement.
Speaker 6 (20:10):
Did you think that makes a difference to instability because
I thought, well, theod was talking. If you were looking
at the outputs for this region in a slightly more
geopolitical way, you would say, one of the great outputs
over the past however long you want to take, has
been instability, which has ricocheted around the world in various
(20:30):
ways of extremism and protests and also just difficulties and
the moment that you could argue massively generalizing, but there
are kind of two things slightly at the middle of it.
There's Israel and Gaza, and there's Iran. Is there a
chance because of all these machinations, however you put them,
that actually you end up with a more stable regime
(20:53):
and that element of the Middle East is changed.
Speaker 5 (20:57):
The issue is that Iran's relationship with its proxies in
the region and the network of partnerships that it's built
in the region really is its crown rules. It's its
single most successful foreign policy endeavor as the Islamic Republic.
So it's very important to it. Now it has suffered
a blow. For sure, it is weakened, although I would
(21:18):
argue it's not weak because it's a temporary thing, not
a permanent thing. But this is significant to Iran, and
it would have to gain a lot of security in
order to give that up. Would such a deal give
it that security. I think a deal with Trump's America
would give it legitimacy for sure. And what happens after
(21:39):
the deal, I think is what's critical to determining how
much Iran is willing to give up some of these partnerships.
If Iran really does see the benefits of the deal,
if for example, you could foresee a potential Islamic republic
that is more integrated economically in the region, an ideal
that a lot of the golf Arab states are trying
to sell to Iran. If it can be reintegrated, if
(22:00):
it's no longer isolated, then it means the regime has
an interest in staying integrated and perhaps giving up some
of those relationships. I don't think it'll be easy, and
it certainly won't be the first thing that happens, but
I do think it's it's a potential scenario.
Speaker 2 (22:18):
John, you mentioned at the start something that we should
you know, people listening. Although it's called Trumpnomics, obviously we're
listening to this show at the same in the same
week that international pressure is mounting on Israel, and the
UK government has taken some steps, and there's been an
alliance of other countries who've also attempted to put more
pressure on Israel regarding the situation in Gaza. That's the
(22:40):
other wrinkle, surely in your story about having greater prospects
for stability here.
Speaker 4 (22:47):
Yes, that was That's what I was asking about as well.
Speaker 6 (22:50):
Most people would say those two things, Israeli Palestinian dispute
and the Iranian that those have been at the bottom
of most of the elements about what has made this
a difficult region.
Speaker 4 (23:02):
For outside powers to deal with.
Speaker 6 (23:05):
You might argue interfere with and cause things, but those
those are the two things, and without a solution on those,
and I think neither Iran. Weirdly seems a little bit
closer to some kind of deal than what seems possible
in Israel Palace.
Speaker 2 (23:20):
But with all this talk of deals again, it does
seem like the sort of parallel tracks we've had a
you know, several weeks of talking about big numbers and
emerging great relationships between the US and the Middle East
and in the Gulf nations at the same time as
this continued drama is playing out and even deepening in
some ways around the situation in Gaza. And the mistake,
(23:42):
some would say, of the first Trump administration was this
idea that you could have the Abraham Accords, that you
could be moving towards a more peaceful place, just hoping
that that dispute would go away. And on October seventh,
everyone said, but we mustn't make that mistake again. The
problem is now still front and center. But Dina Zi,
but it doesn't. It feels like we're still talking around
(24:02):
it in forums like this and in more geopolitical settings.
Speaker 5 (24:07):
Absolutely, the problem is the Israel Palestinian problem is such
an endemic issue to the Middle East. It's so complicated,
it's long standing, and it's just years and years and
years of animosity and now several years of devastating conflict.
It's difficult to pick that apart. But you're absolutely right
to say that there will be no stability in the
(24:28):
region long term if you don't resolve this conflict. This
will always form the context in the backdrop to any
attempt at stability. And the problem is in the last
few years that this conflict has raged on, it has
engulfed the entire region. So we're no longer talking about
a limited conflict that covers just Israel and the Palestinian territories.
(24:48):
We're now talking about something that has drawn in Lebanon,
it's drawn in Iran, it's drawn in the Gulf Arab states,
because they're trying to mediate it. So there is no
prospect stability without resolving the Gaza conflict, and right now
there doesn't seem to be a lot of hope for
resolving the conflict.
Speaker 2 (25:05):
At the broadest level that the conflict it's not just
many years, it's now entering its second century, which is
worth reflecting on. Because we're Trumpenomics, we're going to do
a quick turn back into economics before we end, which
means I'm looking at Uziad and can't help being struck.
You mentioned it at the start. You know, there's one
(25:28):
big change, which is that Saudi Arabia is now a
capital importer, is now borrowing from the rest of the
world to fund all its domestic investments. It's not necessarily
and they be able to have this big checkbook, even
though there was lots of talk of money last week.
I would say for the outside observer, for many people
in the world, Saudi Arabia's actually feels bigger. You know,
(25:48):
it has the greater sort of geopolitical standing now and
John mentioned it in passing as well. But you would
say as an economist, that's happening, that great place on
the world stage is happening as it's economics is actually
becoming weaker and weaker. Is that is that fair?
Speaker 3 (26:04):
Weaker and weaker in the census, providing less capital to
the world. But just just take a step back. This region,
the Gulf countries are incredibly rich. Just perspective. If you
look at Kata where we are today, Kata has about
two eight hundred billion dollars of assets are broad of
external asses. If it decides to liquidate then tomorrow and
distribute to the citizens equally, there's fewer than four hundred
(26:26):
thousand quatter is here. Each cuttery citizen could wake up
next morning with two million dollars a millionaire. You do
the same calculations for the EAE again, the same num
almost the same number, two million dollars again for every
citizen Saudi, because it's significant how the common wealth, but
the population is much larger to twenty million in Saudi's.
So we're talking about sixty thousand dollars per citizens, a
(26:46):
significant amount of money, but the region is not into
that business of liquidating and distributing. They use that wealth
to try and generate economic reterm, They use that wealth
for economic diplomacy, and they use that wealth to generates
soft power. But in the context of a very rich region,
something is changing, and that something is changing the amanda's
topping up every year to that wealth continues to be
(27:10):
positive in Kuwait in the UAE and on Cottact, but
it's negative now in Saldi. That changed last year. As
I said, when aill is are eighty, which is surprising,
that is set to continue when all is lower and
if you look at the arm of projection, as they
expect that to continue all the way out to twenty thirty.
And it just means Saldi has a choice. It has
(27:30):
a choice to spend less at home and try and
stay more abroad. That's one one choice. The other one
is to borrow more from broad to fund all the spending.
And the third thing is to draw on this wealth
that it has accumulated, and that could give a citizen
sixty thousand dollars. And I think this is a choice
that Saldi policy makers need to face in the coming
(27:51):
years and probably need to make a decision on that.
Speaker 2 (27:53):
And if you think about the world we have, you know,
a world in which the dollars lower but the oil
price is lower. But also people are potentially looking to
move money out of the US or orient or sort
of hedge their bets against either the US or China,
you know, wanting to be in the sort of you know,
(28:15):
play both sides. This region benefits from that. Are there
particular countries that benefit from that?
Speaker 3 (28:21):
It could potentially benefit from this. Despite working as an
economists have to make projections about the future. I look
at the past and extrapolate. So far, foreign direct investment
in the region has not been significant.
Speaker 4 (28:33):
Will things change. Possibly.
Speaker 3 (28:35):
I'm not smart enough to make that forecast two years out,
but right now and if you look at Saudi for example,
foreign direct investment into Saudi has been falling since twenty
twenty one, so yes, this things could change. I was
away on sabbatical last year because you approved there and
John approved it. And the point I'm trying to make
is twenty percent of my office hours were people coming
(28:56):
to me asking how they could get jobs in the
Gulf from.
Speaker 2 (29:00):
People and I should say your Harvard students were saying that.
Speaker 6 (29:03):
But the interesting thing about that, if you want a
kind of dinner party version of having been to a
variety of meals, here the number of people who were
thinking of sending their children to US universities who are
now reconsidering. You could argue that that is one of
the biggest sort of changes in terms of what Liberation
(29:23):
Day may have done to people's views of America.
Speaker 4 (29:26):
With a slightly ancillary.
Speaker 6 (29:27):
Thing about people being slightly more reluctant to go to
London for tax reasons, that kind of thing actually does
have a long term impact.
Speaker 2 (29:35):
I mean, Dina, I think certainly listened to some of
the things that we've been saying, and particularly what John
was saying about America's different stance with respect to the
rest of the world and how people are reacting to it.
Probably the world as a whole as a loser from
having America sort of step back from its previous role
and be much more transactional, but understanding that there still
(30:00):
be relative winners and losers from this new global order
or disorder. Do you feel that in your gut that
sort of Middle East will be or the Gulf region
at least will be a relative winner.
Speaker 5 (30:12):
I was just about to say, it depends what part
of the Middle East you're talking about. I do think
that the Gulf is well positioned to be a winner,
certainly with this administration. They are and they represent and
they present themselves to be everything that the Trump administration likes.
The glitz, the glamor the money. All of these things
are very attractive to this administration and it works, and
(30:34):
so I do think that they're in a position to win.
But they can only win, as we said earlier, if
there is greater stability in the whole Middle East region,
and it really can only go one of two ways.
The Trump administration can either bulldoze through some of the
things that we've seen in the last few years, get
to agreements, fast agreements, but agreements that are implemented if
(30:55):
they are committed to achieving some of their foreign policy objectives,
in which case we may actually see greater stability in
the Middle East. Or it will make these great statements
and not implement them afterwards. And if that happens, then
the region will just be as unstable as it is now.
Speaker 2 (31:11):
It's a very superficial response, but from what you were
saying did make me think a little bit the surface
glitz these amazing hotels, But every conversation I've had with
people this week has been about different elements of their
very swanky hotel room that didn't quite work. And I
can't help thinking, you need the glitz, but you also
need the showers that work, and I guess in your
(31:33):
context you need the underlying social and human infrastructure to
be in place as well.
Speaker 3 (31:38):
Well.
Speaker 2 (31:38):
I think that's an excellent place on which to end.
But John Dino Ziah, thank you very much, So we're
going to get to John, did you want to get
a last word? You were looking at me meaningfully. Check
if the boss wants to get the last words, I
think now.
Speaker 4 (31:58):
When we ended on the showers.
Speaker 6 (32:00):
More to add.
Speaker 2 (32:18):
Thanks for listening to Trumponomics from Bloomberg. It was hosted
by me Stephanie Flanders, and I was joined by John,
Michelfwaite Z DoD and Dina Esfandre. With special thanks to
the team at the Katan Economic Forum.
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