In January 1848, a miner found a nugget in a river east of Sacramento that triggered the Californian gold rush. The region was then a distant and unknown land, separated from the territories of the US by mountains, desert and an international frontier.
In January 1848, a miner found a nugget in a river east of Sacramento that triggered the Californian gold rush. The region was then a distant and unknown land, separated from the territories of the US by mountains, desert and an international frontier.Gold changed that for ever. California was ceded by Mexico. San Francisco became one of the world's busiest ports. Twenty years later, a transcontinental railway to the gold fields was finished. In 1914, the Panama Canal was built to shorten the sea journey. Millions of Americans went west.California, with a population of 35 million, is today one of the world's 10 largest economies on its own merits. It is a political giant. The state has produced two of the last six elected presidents.There is a compelling parallel between California's economic history and the Gulf's economic prospects. Before gold, California was of marginal economic interest. The same could be said of the Gulf before oil. Gold was to the world in the mid-19th century what oil is now. In 1848, it was the basis of the US economic system and the gold stock was a measure of America's national wealth. Today, oil and gas consumption is a key indicator of economic development.But why did the mineral find in the American West produce so much, and why has the discovery in the Gulf 60 years later produced, by comparison, so little?The principal reason is political instability, which for decades has deterred the investment that made California flourish. But this is now changing. Confidence in the future of Middle East societies is welcome in its own right. But its long-term economic implications could be profound. Gold coupled with political stability produced California's development. Oil, gas and regional serenity could lead to an even richer and more dynamic society in the Gulf.ExxonMobil Corporation, the world's biggest oil company, forecasts that hydrocarbons will account for more than 80 per cent of world energy use for at least 30 years. This is an opportunity for the Gulf that could match the impact that original gold discovery had on America. The missing ingredient is consensus within the region and recognition in the world outside that the Gulf, imperfect today as California was then, should be allowed to capitalise on its resources on its own terms and at its own pace.Calm after the ports stormDubai and the UAE are not looking for a public row with the US, which is why no rancour accompanied the decision to drop six American ports from DP World's acquisition of P&O.This is a moment for sober reflection, not angry words. Congress needs to consider whether US national interest has been well served by the unfair accusations flung at one of America's closest regional partners. The White House should ponder its failure to explain the deal properly and secure the backing of its own party. And DP World's communications strategy could do with a review.American business hopes there will be no damaging ramifications. ExxonMobil, General Electric, Halliburton, The Boeing Company and many other Fortune 500 companies are enjoying record sales in the UAE. They have grounds for optimism. The partnership between the US and the federation benefits both sides and will endure.But MEED has heard that a message will be delivered to discourage further idiocies. The postponement of the UAE-US free trade talks was no coincidence and further responses, ones that will sting, are likely.Surviving the Saudi stock crashDown more than 20 per cent in less than a month, the Saudi share market is testing investors' nerves and the government's resolve. Some have called for state intervention to stop the equity price rot. Riyadh has rightly resisted. 'This is bad for small investors but good for the economy,' says Abdulaziz al-Dukheil, president of the Consulting Centre for Finance & Investment (CCFI). 'A vital lesson is being taught.'
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