UAE-the New Florence? | THE POLITICUS

UAE-the New Florence?

Last week, Etihad Airways inaugurated its non-stop flight from Los Angeles to Abu Dhabi; flight time 16h 25m. Los Angeles mayor, Eric Garcetti, UAE Ambassador to Washington Yusef Al Otaiba, and US Ambassador to the UAE Michael Corbin, attended the celebration aptly named “Air Bridge to Los Angeles”. This is not a story about an airline. This is a story about a country that is possibly the Florence of the Middle East.   

Not since the Italian City State of Florence, which attracted talent clusters in banking, art, and sciences in the likes of the Medicis, Michelangelo, and Leonardo di Vinci, and led the European Renaissance, has history witnessed a similar magnetic attraction. The UAE, born out of a federation of small Arabian Gulf States less than half a century ago, stands today as a beacon of thought leadership in a region that we normally associate with conflict. In the face of many doubters, the UAE, in its short 40+ years history, has attracted some of the best and brightest talents in the world. Yes, the country has some oil wealth, but this is not its biggest factor of success.  To illustrate the point, the UAE produces 2.8 million barrels per day (mbd) and has a population size of about 9 million people. Compare this to Libya, which produces 1.8mbd and has a population size of about 6 million people. Then look at where the two countries are on all other benchmarks! The reason for the UAE success is its free thinking light government.  The prestigious Swiss based Institute for Management Development (IMD) agrees. IMD ranks the UAE as No.1 for having the lightest government in the world. In term of overall international competitiveness, IMD ranks the UAE 8th. That is ahead of countries like UK(16th), Ireland(18th), and France(27th).

I said that this is not an article about Etihad Airways. However, I think using airliners is helpful because, on one level, air traffic is an important benchmark used by economists and business analysts to gauge business potential and economic progress. Economists and business analysts prefer to season their judgment with test of time and trend analysis. So, I will indulge them.

My business activities with the UAE began in the early eighties and continue to today. In 1985, I was living in Dubai. It was the year that Emirates Air was established, as the first flag carrier in the UAE. At the time, I held a fairly high position in Corporate Lending with Citigroup (it was a different style bank then). Emirates Air had entered into discussions with Boeing to establish a nascent fleet. Naturally Citigroup, along with the US Export Import Bank, became interested in financing the transaction. I do recall the discussions we had in the Bank’s credit committee; a number of members were hesitant to extend credit. The question was: with so many world class airlines (British Air, Air France, KLM, Indonesian, Cathay Pacific, Japan Airlines – you name it) landing and taking off from the Dubai and Abu Dhabi airports, how can Emirates compete and survive?  Foolish thinking! Today, Emirates ranks in the top 10 airlines in terms of passenger miles flown, and the third largest in terms of freight ton/miles.  The number of jobs that both Emirates and Etihad airlines provided in this country over the years is just astounding. Only last November, the two airlines put a combined order with Boeing totaling $102 billion – you do the math!

The point is Etihad, Emirates, and other successful businesses could not have made it in a vacuum. The UAE, because of its business friendly environment, and easy access to large markets such as India, is today’s best platform for international expansion.  If you are the decision maker in your company on where to locate a foreign subsidiary, think UAE: the Florence of the Middle East.

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