Building a Red Sea economy on trade and investment

24 February 2006

For thousands of years, the Red Sea was the principal highway between the Mediterranean and the lands of Africa, Arabia and the Far East. Ancient Egyptians sailed its waters. Greek sailors learned how to navigate its reefs and use monsoon winds to sail to India and back. Marco Polo returned to Venice through the Red Sea. It was the first coffee route from south Arabia and the Horn of Africa to markets in the north. The opening of the Suez Canal in 1869 was the start of a new era, but long-distance sailing also made it possible for merchant ships and tankers to avoid Red Sea ports. Political divisions turned the sea into a barrier between republican Egypt and conservative Saudi Arabia. Competition over the Straits of Tiran between the Sinai and the Arabian peninsula triggered the 1967 Arab-Israel war. The Red Sea still lags behind the Gulf, now enjoying the fruits of soaring energy prices and a real estate boom.

But the balance is shifting. Egypt has turned its Red Sea coast into a winter tourism destination. On the opposite shore, where most Saudis live, new infrastructure projects are transforming future prospects. The Saudi Landbridge railway linking Jeddah with Riyadh and the kingdom's east coast is designed to capture trade now largely benefiting Gulf ports and Dubai in particular. Rabigh, which lies between Jeddah and Yanbu, is the site of the kingdom's largest integrated oil and petrochemicals project. A trebling in annual pilgrimage numbers is forecast. Most will travel to the Holy Cities via Red Sea ports and airports. Jeddah's King Abdulaziz International Airport is getting an overdue $1,000 million makeover.

In December, Dubai's Emaar Properties unveiled the $27,000 million King Abdullah Economic City, south of Rabigh. It calls for a new town with a target population of 75,000 people, a financial district, light industries and a port with container handling capacity bigger than Dubai's. In February, Saudi Aramco announced plans for seismic exploration of the Red Sea coast. A major discovery would transform the region's economic outlook. And last week, MEED reported that steps are being taken to build a 23-kilometre causeway to connect Egypt to Saudi Arabia at the Straits of Tiran. It follows the drowning of 900 people earlier in February when a ferry sailing from Saudi Arabia to Egypt sank in mid-voyage. Arabia and the Middle East are booming. The rise of a new, integrated Red Sea economy is one of the best features of the positive trends sweeping the region.

Clinton's Dubai doubtsNational security is a serious issue. And Senator Hilary Clinton, a 2008 US presidential hopeful who earlier in February backed plans in congress to block DP World's purchase of P&O, is not the first politician to raise the issue to win votes. But it is a cheek for someone from New York to suggest Dubai can't protect the US ports it will manage following the P&O acquisition. I have visited New York dozens of times and lived in the UAE for more than two years. I know where I feel safer. So here is a quiz question. Which port city in 2005 had more than 130,000 serious crimes, including 640 murders? Was it: a) Dubai? Or b) New York? Send your answers to Senator Clinton through her website Or she could ask her husband Bill, who was a well paid speaker at a conference in Dubai in December.

Big questions at MEED's IPO meetUAE Economy & Planning Minister Sheikha Lubna al-Qassimi and Henry Azzam, chairman of the Dubai International Financial Exchange (DIFX), are speaking at the MEED IPO & Asset Management conference in Dubai on 27-28 March. The top talking points will be recent and imminent Middle East initial public offerings (IPOs) and, of course, whether other GCC exchanges are likely soon to follow the sharp downturn seen on the Dubai Financial Market (DFM).

Soccer speculationThere was fresh British newspaper speculation in February about Manchester United's

A MEED Subscription...

Subscribe or upgrade your current package to support your strategic planning with the MENA region’s best source of business information. Proceed to our online shop below to find out more about the features in each package.

Get Notifications