Finance: How Oil-Rich Countries Are Reshaping the World
Harvard Business Review says Gulf countries are investing their wealth in new ways that will engender a broader systemic change in international trade and finance in the decades to come. FORTUNE says $500 oil is coming and we'll be lucky to get through it without "blowing each other up." What's your opinion?
September 30, 2008
Paraphrased excerpt from this month's Harvard Business Review:
"The combination of the gigantic American trade deficit and the price of oil have once again created a pool of financial liquidity among oil exporters in the Gulf Cooperation Council states. But this era of liquidity is markedly different from similar surpluses of the 1970s and early 1980s. Previously, the United States remained a central player in the international financial system. During this latest go-round, however, GCC members are being much more strategic about where they place their petrodollar bets."
Should the West dampen Middle Eastern investment (as in the ports deal), or embrace it (as with GE Plastics, Citibank, Travelodge...)?
Gulf countries are making rapid investments in infrastructure back home. Will this eventually change the geopolitical scene by closing economic and social gaps?
FORTUNE this week quotes the theories of Matt Simmons (career oilman and Cheney confidant) -- that conflict could erupt when the world figures out that peak oil is now. What might happen in this regard if oil prices continue to soar? If Persian Gulf oil revenues begin to dry up?
Article links:
"Where Oil-Rich Nations Are Placing Their Bets" (HBR, first page; sub required to read the full article; Sept 2008 p.119-)
Gulf countries are investing staggering sums in reshaping the world’s financial systems and industries—and themselves.
"Here comes $500 oil" (FORTUNE; Sept 29, 2008, p.214)
If Matt Simmons is right, the recent drop in crude prices is an illusion - and oil could be headed for the stratosphere. He's just hoping we can prevent civilization from imploding.