I imagine that the drop in oil prices is keeping Gulf rulers occupied. The last time oil prices fell so steeply was shortly after the Asian crisis in 1998. Oil prices fell to $10 a barrel at the time. It cost just $15 to fill up the average mid-sized car versus $55 today.
But a lot has changed in the past decade. In 1998, Gulf rulers were fixated by just oil prices. Today, they are equally fixated by stock prices. Why? The Gulf countries have over a $1,000 billion dollars invested in foreign assets. The returns are an increasingly important source of income.
Kuwait’s experience illustrates the point. I estimate its oil exports will be worth around $80 billion this year. This is roughly equivalent to $257,000 per Kuwait household. It’s not a bad annual income.
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They’re back. Traders from across the Silk Road are again visiting Yiwu.
The small coastal city is China’s largest distributor of small consumer goods. It sells mainly to Silk Road traders. But the city’s exhibition halls were empty when I visited in early July. Stall holders sat outside their empty shops playing cards with each other.
What happened? The government tightened its visa policy ahead of the Olympics worried about security during the event. It wasn’t just Silk Road traders that struggled to obtain visas. American and European bankers and CEOs also faced problems.
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I was recently buying lunch in Damascus when two Iraqi immigrants entered the shop. It was an elderly mother and her daughter. The daughter asked a small boy working in the shop to find a chair for her mother. The heat outside was suffocating.
‘There’s so many of us in Syria’, the mother addressed the shop owner with a smile on face. ‘You must be tired of Iraqis by now’.
‘Of course, not’, the shopkeeper replied. ‘Syria is fatih’, he replied. He used the Arabic word for ‘open’.
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The Dow Jones has fallen 14% in the past month. The Silk Road’s equity markets weren’t far behind. Malaysia fell 15%. Shanghai fell 25%. Riyadh fell 26%. The financial crisis is truly global.
I’ve spent the past week trawling through Arab and Chinese newspapers. Editorial pages are filled with commentary on the financial crisis. The West is calling the crisis a ‘once in a century event’. The Silk Road countries say it signals the start of a ‘new century’ altogether.
This doesn’t mean the Silk Road is speaking with one voice. The Arab media have, not surprisingly, linked the financial crisis to military crisis, in particular, the wars in Afghanistan and Iraq.
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