Within 20 years, the company had established a trading centre on the Persian coast of the Strait of Hormuz. From there, it opened a route along the Gulf to Basra, up the Tigris and Euphrates to Mediterranean ports. When Basra was besieged by the Persians in 1795, the company used Kuwait as an alternative base.

The East India Company's complaints about piracy led to the defeat of the Al-Qassimi of Ras al-Khaimah in 1819 and the first in a series of treaties with local rulers that made the Gulf a British domain for 151 years. The independent states of Bahrain, Kuwait, Qatar and the UAE are the legacy.

London's role as an international financial centre started with the Eastern trades. Merchants would gather in shops catering for the 17th century craze for coffee, then exclusively supplied from the Arabian port of Mocha, to underwrite cargo and vessels. This gave birth to Lloyd's of London, still the world's leading insurance market.

And so to 2006. On 16 June, 200 bankers assembled at the Merchant Taylor's Hall in Threadneedle Street to hear about the world's newest and most ambitious finance centres. Omar Bin Sulaiman, director-general of the Dubai International Financial Centre (DIFC), and Habib al-Mulla, chairman of the Dubai Financial Services Authority (DFSA), were joined by Stuart Pearce, chief executive officer (CEO) of the Qatar Financial Centre (QFC), and Philip Thorpe, chairman of the QFC Regulatory Authority. Khalid Hamad, executive director at the Bahrain Monetary Agency (BMA central bank), said that the Bahrain stock market was lightly affected by the 2005/06 share boom and bust because it was better regulated than the rest. They all agreed that the Gulf centres would compete with, as well as complement, the City of London. All asserted they were viable.

But there might be a better way. Robert Gray, chairman of HSBC's debt finance and advisory group, suggested steps that might lead to a single GCC stock exchange. He offered London's experience to help that happen.

The City has demonstrated its ability to adapt. The British Empire died last century and the UK is part of the EU. Nevertheless, it remains the world's premier international finance centre. The new frontier is Islamic finance.

Speaking in London on 13 June, UK Chancellor Gordon Brown said he wanted Britain to be

the leader of sharia-compliant banking. Lord Mayor of the City of London David Brewer told MEED's Invest: Saudi Arabia conference in

the capital six days later that this had already

happened.

In the Gulf, the DIFC and QFC are operating, Bahrain Financial Harbour opens in 2007

and Riyadh's King Abdullah Financial District is under construction. It is too soon to say

which will eventually come out on top. But

it is likely that, whoever does, the City of

London once again will probably be the biggest winner.

But the pace of new initiatives in Saudi Arabia seems to be quickening. In early June,

two new special economic zones (SEZs) were

announced: one in Hail in central Arabia and one in Medina. They complement the first in the

King Abdullah Economic City which was

unveiled at the end of last year. Three more are coming.

At the MEED Invest: Saudi Arabia conference, Saudi Arabian General Investment Authority (SAGIA) transport director-general Abdulaziz

al-Babutain hinted at plans for a new shipping

line and other projects. Saudi Arabian Mining Company (Maaden) CEO Abdullah Dabbagh forecast further programmes that would make minerals the third pillar supporting the Saudi economy after oil and gas and petrochemicals. Samba Financial Group chief economist Brad Bourland said the Saudi e