Investing in the Future of the Middle East

Business is driven by profits, by the hard facts of supply and demand. But it is also sensitive to social and political conditions. A key example of this is the struggling stock market in the wake of the terrorist attacks on New York and Washington.

The financial world took a major hit when the World Trade Center was attacked, and has still not entirely recovered. Fear of renewed attacks and a general feeling of insecurity hinder the spirit of investments, especially where financial risks may be involved. And one of the most volatile markets right now is the Middle East.

Few western companies are conducting business in the region at the moment. Many fear that the markets are too unstable to invest in. When the political situation is so uncertain, no one can guarantee that an investment will pay off. However, many more companies are pulling out of the region on the basis of something more fundamental - a clash of cultures between the West and the Arab world.

In the wake of the terrorist attacks many Americans and Europeans feel unsafe in the Middle East. Part of this is due to the concentrated media attention -largely negative - streaming out of the region. Everywhere one looks, bombs seem to be exploding. The evening news is filled with the latest reports on attacks in Israel and Afghanistan.

But the Middle East comprises more than just religious and ethnic conflicts. It is rapidly modernizing and becoming one of the fastest growing economic regions. The Gulf states and Emirates, for example, have an average per capita income of $17,000. However, without trading partners in the West to help inject foreign revenue and stabilize the economy, the regional conflicts will become more pronounced.
Jordan sets example

The Kingdom of Jordan is attempting to provide a bridge for trade with the Arab world. A desert country with no natural resources and a per capita income of $3,500, Jordan has recognized the necessity of appealing to western businesses to invest in the economy. The signing of the US-Jordan Free Trade Agreement in September of this year is one step in the right direction.

Another step is the creation of joint development projects under the auspices of the Jordan Society for Quality, a governmental project established in 1996 to increase western companies' awareness of investment opportunities in Jordan. The society hosts an international economic conference every year.

This year Germany was the only non-Arab country to send delegates to the conference. All other western guests turned down the invitation to attend the conference in Amman.

Germany's attendance at the conference was not surprising as it is Jordan's main European trading partner. Whereas the United States supplies military aircraft and weapons, Germany concentrates on development programs that will bring profits to both Jordan and Germany.

For manager Frank Schiller of Preussag AG, an investment in Jordan is an investment in the future. Schiller admits that many western investors are thinking twice about investing in the Middle East, but he points out that Jordan is a relative oasis of security and an ideal country for German investment. Of course the veritable lack of competition ensures that German companies will reap profits in the end.