Innovation is often viewed as a mindset or something that can be stimulated with the right policies. However, it also has a clear geographical component. Many ancient cities were built alongside rivers. Today’s most innovative regions – Silicon Valley, Boston, New York, London, Dubai, Tel Aviv and Singapore – all look out over an ocean.
The proximity of open water stimulates entrepreneurship, lofty ambitions and risky ventures. In this series in the Dutch newspaper Het Financieele Dagblad, our lead researcher Haroon Sheikh looks into the innovative strengths and developments in seven major coastal regions. This week’s edition is about the Arabian Seas. Coming up next week: the Indian Ocean.
The Arab world is under pressure. Ever since the Arab Spring, many countries face civil war, instability and regional conflicts. Nevertheless, one region flourishes: maritime Arabia.
Geographically, the Arabian world is most commonly associated with the desert. Civil wars have erupted in many of these desert regions, and radical movements thrive there. A belt of chaos runs from the Sahara in northern Africa through Mali and Libya via the Egyptian Sinai to Yemen on the Arabian Peninsula.
Besides the desert, the Arab world boasts another type geographical area: the so-called Fertile Crescent, which runs along the river beds of the Nile, the Euphrates and the Tigris. This is the region where the major historical Arabian empires were formed and where, until recently, powerful nation states controlled the Arab world. Today, Egypt, Syria and Iraq are all fragile countries. The influence of non-Arabian countries such as Turkey, Iran and Israel grows in this regional power vacuum. However, there is a third region in the Arab world that is beginning to take more and more initiative: maritime Arabia.
The Arabian seas offer unprecedented ambitions and opportunities
Amazing architecture and entirely new urban areas are rising up along the coastlines of the Gulf region. Just think of the Burj Khalifa, the Burj al-Arab and the Palm Islands in Dubai or the Guggenheim, the Louvre and Ferrari World in Abu Dhabi. It is often suggested that the wealth in this region is entirely dependent on oil, but that is a misconception. The sources of this wealth can be traced to various regional maritime cultures that date back a long time.
Abu Dhabi is the wealthiest of the Emirates. In the eighteenth century, the Bani Yas tribes settled along the coast, where they lived off fishing and pearl harvesting. When a conflict erupted between the British and the Bani Yas’ rivals, the Qawasim, Abu Dhabi was able to flourish as a trade city. From the 1960s onwards, oil brought so much wealth that all forms of taxation were abolished. Additionally, long-term visions were implemented: five-year plans were drawn up for education, agriculture and infrastructure.
Now that Abu Dhabi has become one of the wealthiest places on the planet, it shifts its focus to the future. Sovereign Wealth Funds such as Abu Dhabi Investment Authority (Adia) and Mubadala invest all over the world. They not only have interests in leading global organizations, but also draw these companies to Abu Dhabi in order to develop a local knowledge ecosystem. One such cluster was formed in the field of aerospace. Another example is high-speed racing, with Formula 1 and Ferrari World. Recently, the Louvre opened its doors there, and a Guggenheim museum is in development. Abu Dhabi strives to be a market leader. The most ambitious project of all is Masdar, a new city built around sustainable technologies, for example pertaining to transport. The goal is to use oil money to build a climate-neutral city that serves as a laboratory for the future.
Dubai pushes the boundaries
Dubai is Abu Dhabi’s little brother in the Emirates. Whereas Abu Dhabi mostly focuses on the top of various sectors, Dubai prefers to push the boundaries. It had no choice but to take significant risks. Oil revenue peaked in the 90s, and today makes up less than 5% of the city’s gross domestic product. Dubai is often dismissed as a bubble or casino economy, yet the Emirate has been applying two core principles for a long time.
At a very early stage, the ruling Maktum family decided to welcome foreigners and give them ample room. Whenever another conflict erupted in the region, new migrants came to Dubai. Entrepreneurial Iranians, Indians, Lebanese and Kuwaiti settled in the coastal town. That openness characterizes the Emirate to this day: only ten percent of the population consists of natives; the rest is made up of migrant workers and expats. Dubai is sometimes jokingly referred to as “the nicest city in India.”
The second principle has to do with Dubai’s major investments in its infrastructure. In the 60s, it took out a risky loan for the development of the Dubai Creek and Port Rashid. The second harbor, Port Jebel Ali, is the largest man-made harbor in the world. Dubai built an airport, despite the fact that several others already existed in the region, and bought up empty seats to prevent flights from being cancelled. The list goes on: Dubai boasts the first seven-star hotel (the Burj al Arab), the tallest building in the world (the Burj Khalifa), horse racing tracks and the artificial island groups The Palm and The World. Many of these projects are not profitable at first glance. However, the underlying philosophy is that Dubai is to be considered as a whole, so indirect effects can be taken into account. Despite their empty rooms, the exorbitant hotels contribute to the brand of a city that offers unlimited possibilities. This strategy puts Dubai ahead of its competitors, of which there are several in the region.
Oman, Bahrain and Qatar
Oman attracts far less attention than the Emirates. This stable nation is led by Sultan bin Qaboos. It is not clear what will happen after his passing, since there is no heir to take his place. Oman’s capital Muscat has a quiet atmosphere and there are no futuristic buildings to be found. Nevertheless, the country has plans for its future. Oman is developing the port of Sohar, for example, which is strategically located along the geopolitically controversial Strait of Hormuz. With this port, the country aims to play a central role in the trade networks that are emerging around the Indian Ocean. Trade and seafaring are in the Omani’s DNA: their ancient realm stretched all the way from Zanzibar in Africa to Baluchistan in Pakistan. Legend has it that Sinbad the Sailor was born in Sohar.
There are two other maritime states in the region. The name of the island nation of Bahrain means “two seas.” It was the first Gulf state to discover oil and the first to develop a post-oil economy. By adopting an even more welcoming business climate than Dubai, Bahrain has developed a strong financial sector. Logistically, it serves as a gateway into Saudi Arabia.
Because of Qatar’s access to the third-largest gas reserves in the world, its population of just around 300,000 people lives in one of the wealthiest countries on the planet. Despite its modest size, Qatar has global ambitions for its wealth, especially after the young emir Tamim took over in 2013. The country exerts a subtle form of power: by buying interests in major western corporations, purchasing real estate in cities like Paris, acquiring entire football clubs and hosting the World Cup in 2022 in the newly built Lusail City. The crowning achievement of its strategy is Al-Jazeera. With this network, which has a larger reach than all other Arabian networks combined, Qatar influences millions of Arabs all over the world. During the Arab Spring, the station adopted an independent foreign policy by supporting various protests. This led to conflicts with al-Sisi’s Egypt and especially with Saudi Arabia. One of the terms of the sanctions that Saudi Arabia imposed against Qatar last year was the cancellation of Al-Jazeera. In addition to support from Turkey and Iran, another major investment also helps against these sanctions: Oman can import goods from overseas directly via the recently opened Hamad Port.
Historically speaking, Saudi Arabia is not part of maritime Arabia. The country is primarily characterized by the uncompromising mentality of the desert, a puritan faith and martial virtues. An embrace of maritime culture is taking place under crown prince Mohammed bin Sultan. It is symbolized by the recent purchase of two Egyptian islands and the plans for the development of Neom, an immense coastal city on the border with Egypt and Jordan. The country wants to break free from its reliance on oil by selling shares in the state-run oil corporation, investing in a technology fund belonging to Japan-based Softbank and embracing new technological developments. Saudi Arabia was the first country to award citizenship to a robot. Domestically too, the country is stimulating a more liberal and moderate policy. It remains to be seen whether Saudi Arabia’s transformation will succeed, since the country lacks the maritime traditions and culture of the smaller Gulf states.
The Gulf region is like the California of the Arabian world. Here, as in California, there is a culture of unlimited possibilities and ambitions. The Arab world is also characterized by strong utopianism and its embrace of social engineering. A seafaring mentality is prominent here. Finally, this region of limitless opportunities attracts migrants who, like those in California since the time of the gold rush, are forced to live in horrendous conditions.
Maritime Arabia can play an important role in the emerging global trade routes, especially as a gateway between Asia and Europe. That is why so many ports are being built. Across the water, Pakistan and China are collaborating on the development of the port city of Gwadar. Iran is building the port of Chabahar with help from India. Sohar, Hamad, Gwadar and Chabahar might become major hubs in the future. Although they are relatively unknown at the moment, things can move fast in this region: as recently as the 90s, there was not even a highway between Dubai and Abu Dhabi.
One major risk threatens this region. Decades ago, another maritime hub existed on the other side of the Arabian Peninsula. Beirut was a cosmopolitan city and a major financial center. All that ended as a result of geopolitical tensions in the region. This should serve as a warning to the Gulf.
To read the article in Dutch, click here.
About the author
Haroon Sheikh (37) supervises FreedomLab Thinktank, works as a researcher at the investment company Dasym and is part of the VU’s Centrum Ethos as a philosopher.
He earned his doctoral degree with research into the influence of old traditions on modern societies and published two books: De Opkomst van het Oosten and Embedding Technopolis.
A book about new seaside powers will appear in 2018, based on these features in FD Morgen.