Washington Post: GCC rise is reshaping the world.. It will ‎witness the largest flows of wealth in history

The American journalist and politician Fareed Zakaria, in an article in the “Washington Post” newspaper, dealt with the rise of the Gulf countries, considering that it might reshape the world.

“If you are surprised by Saudi Arabia’s de facto takeover of professional golf, prepare for many similar announcements in the months and years to come,” says Zakaria, referring to the announcement of the partnership between the PGA and the LIV Golf Championship sponsored by the Public Investment Fund.

Zakaria asked a question about the fastest growing economy in the world last year? Pointing out that it may come to your mind that it is India or China, or any of the Asian tigers, but it is a wrong assumption. It is Saudi Arabia, which recorded a growth rate of 8.7%. While Kuwait and the United Arab Emirates also recorded significant growth.

The American writer wondered about the causes of prosperity? Pointing out that despite what many hope, the world is still very dependent on fossil fuels. The Ukrainian war and the sanctions imposed on Russia have reduced Moscow’s importance in the global oil and gas markets

In addition, two of the world’s largest oil producers, Iran and Venezuela, are under sanctions and have aging and deteriorating oil infrastructures. While the United States produces a lot of oil and gas, it still imports large quantities. As a result, the world is currently dependent on a few Gulf countries for a steady supply of oil and gas.

Zakaria says these conditions are likely to persist over the next decade, and if that happens, the Gulf states will experience the largest inflows of wealth in history.

The four major sovereign wealth funds of these countries have reportedly amassed nearly $3 trillion in assets, an increase of 42% over the past two years. Saudi Arabia’s main investment vehicle, the Public Investment Fund, is expected to be worth more than $2 trillion by 2030, making it the largest in the world. In the near future, these may become the most important gatherings of capital in the world.

The writer warns of the economic impact of this wealth. Saudi Arabia has bought the professional golf company. In January, Bloomberg News reported that the kingdom sought to buy the Formula 1 racing franchise for more than $20 billion. Also, the most famous soccer star in the world, Cristiano Ronaldo, moved to play with a Saudi club for $ 200 million annually. Riyadh is making huge investments in the online gaming industry, hoping to become a major player in this field. Looking at the most prestigious sports teams and luxury hotels in Europe and brands, you will see that the Gulf owners are behind them. Zakaria quoted a Gulf minister as saying, “We have built a lot of infrastructure in our country. What comes now is a cash investment.”

The writer believes that this increase in wealth has reshaped the Middle East. The dominant players in the region – Egypt, Iraq, Syria – for various reasons (poverty, division) are not currently able to play leadership roles. The Gulf is the driving hub. Saudi Arabia, in particular, has made a major strategic shift in its foreign policy. Including relations with Qatar and Jordan, restoring diplomatic relations with Iran and seeking a peace agreement in Yemen.

All Gulf countries are deepening their relations with China, which is currently the largest customer in the region. In 2001, Saudi Arabia’s trade with China was just over $4 billion, about a tenth of its trade with the United States and the European Union. In 2021, it was about $87 billion, more than the United States and the European Union combined. At a time when economic relations are growing rapidly, the Washington Post even reported that China has resumed construction of a suspected military facility in the United Arab Emirates.

GCC wants close economic ties with China and close security ties with America. They would like to be able to deal freely with everyone, including Russia. And the writer says: If you want to see where the Russians went to escape Western sanctions, visit Dubai, where you will hear more Russian voices than Arabic in some hotels.) They have growing relations with India, and they are even building new ties with Israel. Most countries would like to pursue a policy that allows them to operate independently, and to choose friends in the West and East in accordance with their interests. Zakaria stresses that if the crown prince continues down the path he is currently on, Saudi Arabia will likely be able to manage this balance.