WEBVTT - Ziad Daoud Explains How War with Iran Will Reshape the Gulf 0:00:02.720 --> 0:00:16.480 Bloomberg Audio Studios, Podcasts, radio News. 0:00:18.520 --> 0:00:21.360 Hello and welcome to another episode of the Odd Thoughts podcast. 0:00:21.440 --> 0:00:24.240 I'm Tracy Alloway and I'm Joe. Isn't thal Joe. 0:00:24.239 --> 0:00:27.480 It is currently April tenth, That's right, it's a Friday. 0:00:27.520 --> 0:00:31.200 It's a beautiful friday outside. We always say when we're 0:00:31.240 --> 0:00:33.720 recording things nowadays, because we never know what's going to 0:00:33.840 --> 0:00:37.239 change in the next hour or day or week. But 0:00:38.120 --> 0:00:41.080 at the moment, there is some sort of ceasefire, yes, 0:00:41.159 --> 0:00:46.080 between the US and Iran. Israel is rather more uncertain 0:00:46.120 --> 0:00:48.879 at the moment, but it seems that whatever happens in 0:00:48.920 --> 0:00:52.960 the short term with this particular conflict, that the region, 0:00:53.400 --> 0:00:56.720 the Gulf region and the Middle East has already been vastly, 0:00:57.000 --> 0:00:57.840 vastly changed. 0:00:57.960 --> 0:01:02.680 Yeah, it seems almost of that in many different dimensions. 0:01:02.720 --> 0:01:04.760 I mean, look, you know, first of all, there's just 0:01:04.800 --> 0:01:07.360 been the little physical damage. You can have a ceasefire, 0:01:07.440 --> 0:01:10.720 but there's going to be energy and time to get expended, 0:01:10.760 --> 0:01:14.080 et cetera. Then, of course, and we already have done 0:01:14.120 --> 0:01:18.240 an episode for example, about Dubai real estate in particular, 0:01:18.400 --> 0:01:21.840 or Dubai in particular, and the question of like, here's 0:01:21.920 --> 0:01:24.679 this country that was perceived really by people around the 0:01:24.680 --> 0:01:27.600 world is maybe one of the most stable places that 0:01:27.680 --> 0:01:30.240 you could live. And obviously some of that is being 0:01:30.280 --> 0:01:32.920 called into question. But then, like you know, here's just 0:01:33.080 --> 0:01:38.280 a gigantic war, and wars, even short ones potentially have 0:01:38.360 --> 0:01:41.160 all kinds of ripple effects and scars and so forth, 0:01:41.280 --> 0:01:43.759 and it'll change obviously the course of the region. 0:01:43.920 --> 0:01:45.680 Yeah, the way I think about it is the Gulf 0:01:45.760 --> 0:01:50.640 region was sort of a center of let's say three things, 0:01:50.680 --> 0:01:55.080 so energy mm hmm, oil and resulting petrochemicals. Yes, we've 0:01:55.080 --> 0:01:57.880 talked a lot about capital capital. There's a lot of 0:01:57.920 --> 0:02:00.720 money emanating from the region because of it oil wealth, 0:02:00.760 --> 0:02:03.320 and that flows into all sorts of things from you know, 0:02:03.520 --> 0:02:06.760 US tech stocks to infrastructure investments, and I love that. 0:02:07.160 --> 0:02:09.920 And then thirdly, it's well, I guess I could add trade. 0:02:10.200 --> 0:02:13.000 It's a purveyor of trade routes for sure, but setting 0:02:13.040 --> 0:02:16.519 that aside, thirdly, it's also a capital of living standards 0:02:16.560 --> 0:02:19.359 and this idea of we're going to build a diversified 0:02:19.800 --> 0:02:22.880 Gulf city state where people can come and live, and 0:02:22.919 --> 0:02:25.320 we sort of talked about on the Dubai episode, but 0:02:25.639 --> 0:02:28.120 today we're going to be talking about maybe all three 0:02:28.480 --> 0:02:31.960 or four of those things, and what this particular conflict 0:02:32.000 --> 0:02:35.440 actually means for them for a region that has really 0:02:35.600 --> 0:02:41.600 built itself around this idea of energy, capital, living standards, 0:02:41.600 --> 0:02:42.160 and trade. 0:02:42.320 --> 0:02:44.240 And then the one thing I would just point out 0:02:44.480 --> 0:02:48.920 is that obviously the region has almost a reputation for 0:02:49.000 --> 0:02:51.440 being in some version of constant war or there is 0:02:51.520 --> 0:02:55.480 constant tension, et cetera. Right, so at various time do 0:02:55.520 --> 0:02:56.359 you disagree. 0:02:56.520 --> 0:02:59.080 I mean, the Iran threat has always been there, but 0:02:59.240 --> 0:03:01.920 one of the key themes of the UAE, for instance, 0:03:01.919 --> 0:03:04.720 it's becoming this haven of stability was that it wasn't 0:03:04.720 --> 0:03:06.480 expected to erupt in this way. 0:03:06.680 --> 0:03:09.000 That is indisputable, and that is part of why it's 0:03:09.080 --> 0:03:12.160 so shocking. But you know, tensions in the Middle East 0:03:12.520 --> 0:03:16.079 on some level is almost like a cliche in the news, 0:03:16.120 --> 0:03:18.600 et cetera. And so the you know, over years, we're 0:03:18.639 --> 0:03:22.960 in multiple Gulf wars et cetera. The war in Gaza 0:03:23.000 --> 0:03:26.359 that's been taking place over the last multiple years, I mean, 0:03:26.800 --> 0:03:31.160 there's just extraordinary. There's a long history of conflict. 0:03:31.440 --> 0:03:33.359 Yes, so we are going to be talking about how 0:03:33.360 --> 0:03:38.000 the latest conflict is going to impact the region potentially forever. 0:03:38.160 --> 0:03:40.960 So we have the perfect guest. I'm very happy to 0:03:41.000 --> 0:03:43.960 say we are going to be speaking with the chief 0:03:44.000 --> 0:03:48.360 emerging markets economist over at Bloomberg Economics, Zia Daoud, someone 0:03:48.400 --> 0:03:51.160 we've spoken to before. I think our last episode with 0:03:51.600 --> 0:03:53.920 him was about Egypt, but someone I used to speak 0:03:53.920 --> 0:03:55.800 to a lot more when I was actually based in 0:03:55.880 --> 0:03:59.880 Abu Dhabi and he was based in Dubai. He's about 0:04:00.080 --> 0:04:03.440 to go back to Dubai after being in London for 0:04:03.480 --> 0:04:06.360 the past few weeks. So, Zied, thank you so much 0:04:06.440 --> 0:04:07.800 for coming back on our thoughts. 0:04:08.120 --> 0:04:10.040 Thank you for having me John Tracy. 0:04:10.240 --> 0:04:13.160 So out of curiosity, what have the past few weeks 0:04:13.200 --> 0:04:15.640 been like for you as someone who is not, you know, 0:04:16.080 --> 0:04:20.200 not just living and breathing golf economics, but also physically 0:04:20.360 --> 0:04:22.440 living in the region for the past few years. 0:04:22.760 --> 0:04:26.440 It's been intense because although we've been expecting the war 0:04:26.480 --> 0:04:31.400 to take place, the intensity of it, the reaction and 0:04:31.440 --> 0:04:33.960 feeling it rather than expecting it and living through it 0:04:34.040 --> 0:04:37.440 rather than expecting it has been unprecedented I think for 0:04:37.520 --> 0:04:40.280 the region. But yeah, it was expected, but it was 0:04:40.320 --> 0:04:42.839 still different when you feel it when they need just 0:04:42.839 --> 0:04:43.600 anticipate it. 0:04:43.720 --> 0:04:46.880 When you say it was expected, do you mean it 0:04:46.960 --> 0:04:52.600 was expected in the sense that by early February that okay, 0:04:52.839 --> 0:04:57.200 you know clearly the rhetoric and the actions and ship 0:04:57.279 --> 0:05:00.760 movements instead of or appointing to possible war or is 0:05:00.800 --> 0:05:05.000 it something deeper, long standing, We're there was this tension 0:05:05.120 --> 0:05:09.080 that was eventually perhaps going to come to a boil 0:05:09.200 --> 0:05:11.560 or come to a head in some manner or another. 0:05:12.200 --> 0:05:14.640 I think for us, and we've done this in writing, 0:05:14.680 --> 0:05:17.360 and I've done that mostly with my colleague Dinas Fandi, 0:05:18.360 --> 0:05:21.279 is that since the last war in June, the Twelve 0:05:21.320 --> 0:05:24.520 Day War, it felt like there was unfinished business and 0:05:24.560 --> 0:05:26.839 there'll be a second round of this war. So we've 0:05:26.839 --> 0:05:30.039 written multiple pieces saying this is not over, there'll be 0:05:30.040 --> 0:05:33.839 another rand of escalation. And towards the beginning of the year, 0:05:33.839 --> 0:05:37.040 as you had more US mobilization, as you had more 0:05:37.080 --> 0:05:40.760 threats from President Trump, it became increasingly lucky that a 0:05:40.800 --> 0:05:44.359 war was going to take place. I personally canceled some 0:05:44.440 --> 0:05:47.320 trips because I thought the war would erupt all I'm 0:05:47.320 --> 0:05:50.120 abroad and I didn't want to be stuck abroad. And 0:05:50.400 --> 0:05:52.039 we also thought that it was going to start on 0:05:52.040 --> 0:05:53.960 a weekend. Actually we thought it was going to start 0:05:54.000 --> 0:05:56.400 either on a Friday or a Saturday. So I think 0:05:56.480 --> 0:06:01.200 from January onwards, every Friday at the office US for expectations. 0:06:01.200 --> 0:06:04.920 Who thinks that there will be a war this coming weekend? 0:06:05.200 --> 0:06:07.640 And sure enough it did her up on February twenty eighth. 0:06:08.120 --> 0:06:10.800 So yeah, in some sense it was expected. I was 0:06:10.839 --> 0:06:14.440 on alert every weekend waiting for something to happen. 0:06:14.720 --> 0:06:17.479 One thing that I think was more unexpected was the 0:06:17.520 --> 0:06:23.240 retaliation by Iran on places like the UAE. And I 0:06:23.320 --> 0:06:25.560 think it's probably fair to say that if you were 0:06:25.720 --> 0:06:29.320 a leader in the UAE or Saudi Arabia for that matter, 0:06:29.360 --> 0:06:34.120 who had invested heavily in Trump in various ways politically, 0:06:35.160 --> 0:06:37.479 this was maybe not what you were expecting to be 0:06:38.040 --> 0:06:41.520 dragged into this particular conflict and see some of your 0:06:41.560 --> 0:06:46.440 infrastructure directly hit. What's the mood like for UAE and 0:06:46.600 --> 0:06:48.000 Saudi leaders at the moment? 0:06:48.680 --> 0:06:53.840 For them, I think is probably their worst nightmare. In 0:06:53.880 --> 0:06:56.440 some sense, it is an outcome they had tried and 0:06:56.560 --> 0:07:01.839 lobbed to avoid for a long time. That just during 0:07:01.839 --> 0:07:05.240 this Trump's term of presidency, which started in January twenty 0:07:05.279 --> 0:07:09.880 twenty five, the golf leaders hosted Trump on his first 0:07:10.040 --> 0:07:12.760 planned foreign trip. If you exclude the trip to the 0:07:12.840 --> 0:07:15.720 Vatican when the Pope died. Or Peckplus, which is led 0:07:15.760 --> 0:07:18.080 by Saudi Arabia and it has a number of golf 0:07:18.120 --> 0:07:23.480 countries as important producers, started raising oil output in April, 0:07:23.560 --> 0:07:27.120 shortly after Trump's inauguration by a month, so far bigger 0:07:27.120 --> 0:07:30.720 than markets were expecting. And that came after months of delay, 0:07:31.200 --> 0:07:34.600 and we were, among other people were asking why did 0:07:34.600 --> 0:07:37.480 they do this against probably their economic interests, And one 0:07:37.520 --> 0:07:40.040 potential hypothesis is that they were trying to please Trump 0:07:40.120 --> 0:07:42.720 because he liked lower oil prices, so they hosted him 0:07:42.720 --> 0:07:46.200 on his first trip. They gave him, you know, they 0:07:46.200 --> 0:07:48.680 injected a lot more barrels of oil into the market 0:07:48.680 --> 0:07:52.960 to lower oil prices, potentially against some of their economic interests. 0:07:53.240 --> 0:07:56.160 They pledged trillions and trillions of dollars of investments and 0:07:56.200 --> 0:07:58.560 deals in the US. So they gave all of this, 0:07:58.680 --> 0:08:01.400 and I think they wanted one thing, which is basically 0:08:01.520 --> 0:08:03.840 no regional war, because they thought they'd be caught in 0:08:03.840 --> 0:08:06.640 the crossfire. And what did they get. Trump visited the 0:08:06.640 --> 0:08:09.240 Golf three golf states in May twenty twenty five. He 0:08:09.320 --> 0:08:12.560 visited the UAE, He visited Saudi Arabia and he visited Cutter. 0:08:13.040 --> 0:08:17.160 A month later, war erupted between Israel and Iran, which 0:08:17.200 --> 0:08:22.280 the US intervened in. Four months later, Israel bombed Toheim Cutter, 0:08:22.320 --> 0:08:26.160 where Trump was in May, and about less than a 0:08:26.200 --> 0:08:28.640 year later, in fact, we have a regional war in 0:08:28.640 --> 0:08:32.160 in which these countries are in the crossfires. So I 0:08:32.160 --> 0:08:34.920 think it's an outcome that they tried hard to avoid. 0:08:35.640 --> 0:08:38.200 But for Trump, when it became a choice between what 0:08:38.360 --> 0:08:41.760 the golf wanted and what Israel wanted, Trump had the 0:08:41.800 --> 0:08:44.760 clear basically choice which he choices Israel over the golf. 0:08:45.160 --> 0:08:48.000 One of the things you hear about people talk about 0:08:48.160 --> 0:08:51.800 is okay, the US is an important security partner for 0:08:52.280 --> 0:08:56.400 the region. It provides a quote security umbrella, et cetera. 0:08:57.240 --> 0:09:00.000 What does it mean to be an important security partner? 0:09:00.160 --> 0:09:03.320 Or if infrastructure was in fact hit, not all of 0:09:03.360 --> 0:09:06.280 it was able to stop the US was not able 0:09:06.480 --> 0:09:09.440 or has not been able to open the Strait of 0:09:09.480 --> 0:09:14.920 Hormuz unilaterally and actually at the moment, Iron clearly controls. 0:09:14.960 --> 0:09:19.320 It does this fundamental premise like setting aside how people 0:09:19.400 --> 0:09:24.360 feel if the US does not have the capability the missiles, 0:09:24.400 --> 0:09:28.360 the missile defense, et cetera, to actually keep secure the 0:09:28.480 --> 0:09:31.800 infrastructure to keep the strait of Hormoves open. Does it 0:09:31.960 --> 0:09:35.239 change the discussion or the thinking of what a security 0:09:35.280 --> 0:09:36.439 relationship even means. 0:09:37.200 --> 0:09:39.320 I think it does. But there are two dimensions to this. 0:09:39.720 --> 0:09:42.600 There's a dimension where you have the military equipment, and 0:09:42.600 --> 0:09:44.800 there's a dimension where you have sort of the political 0:09:44.840 --> 0:09:47.400 will and the strategic side of it. In terms of 0:09:47.400 --> 0:09:50.800 military equipment, I think the US military equipment may have 0:09:50.880 --> 0:09:53.880 proven their worth. Okay, a lot of drones, a lot 0:09:53.920 --> 0:09:57.840 of missiles were thrown at the Gulf, and very few 0:09:57.880 --> 0:10:01.680 percentage of this has filtered through. Yes, some have, but 0:10:01.720 --> 0:10:03.640 it could have been a lot worse. And the reason 0:10:03.679 --> 0:10:05.679 why it wasn't a lot worse is because they were 0:10:05.760 --> 0:10:09.160 using state of the art US military equipment, which has 0:10:09.200 --> 0:10:13.120 proven their worth. So I don't think that will stop. Actually, interestingly, 0:10:13.200 --> 0:10:16.040 if you look at the golf trade relationship, there was 0:10:16.080 --> 0:10:18.839 a big change. So the US used to be an 0:10:18.880 --> 0:10:22.840 important trade partner, then China took over around twenty ten, 0:10:23.280 --> 0:10:25.800 and now trade with China is at least three times 0:10:25.840 --> 0:10:28.800 as big as trade with the US. Except in one 0:10:28.840 --> 0:10:33.000 area where defense, the US completely dominates, so that side 0:10:33.040 --> 0:10:34.960 and I don't think that will change. And then there 0:10:35.040 --> 0:10:38.000 is the political and sort of the strategic side. This 0:10:38.080 --> 0:10:41.600 is not the first time that the US security umbrella 0:10:41.679 --> 0:10:45.560 disappoints the Gulf. This is one episode out of several. 0:10:46.040 --> 0:10:48.640 There's this current one which is probably the biggest. There 0:10:48.679 --> 0:10:51.240 was an episode in twenty seventeen one cutter Face to 0:10:51.240 --> 0:10:54.560 blockade from its neighbors and didn't get the US protection 0:10:54.679 --> 0:10:57.840 that it wanted. You know, in twenty eighteen and nineteen 0:10:57.840 --> 0:11:00.960 there were attacks on energy facilities in the Gulf, both 0:11:01.240 --> 0:11:03.360 in the Persian Gulf but as well as the attack 0:11:03.440 --> 0:11:06.840 on Aramquo in twenty nineteen, and the US was nowhere 0:11:06.880 --> 0:11:11.080 to be seen. So I think the security umbrella, the 0:11:11.080 --> 0:11:14.080 political umbrella for the US security is definitely there's a 0:11:14.160 --> 0:11:19.080 challenge there and hasn't delivered on certain important points of time. 0:11:19.400 --> 0:11:22.320 But when it comes to the military equipment, I think 0:11:22.760 --> 0:11:24.520 that has proven its worth. 0:11:40.679 --> 0:11:44.000 Can we talk about intra golf relationships for a second, 0:11:44.040 --> 0:11:47.360 because it's hard to keep up from what I remember. 0:11:47.920 --> 0:11:50.680 The blockade of Katar was the big story when I 0:11:50.760 --> 0:11:53.600 was in the region in like twenty seventeen, and since 0:11:53.679 --> 0:11:57.040 then it seems like kat a kind of made up 0:11:57.440 --> 0:12:02.000 with Saudi and the UAE but there are still some tensions. Meanwhile, 0:12:02.080 --> 0:12:06.160 Saudi Arabia and the UAE are still maybe best described 0:12:06.160 --> 0:12:09.040 as frenemies at this point, I don't know what's the 0:12:09.080 --> 0:12:12.720 current status of those relationships. And does the conflict in 0:12:12.760 --> 0:12:16.920 Iran maybe start to bring some of those regional superpowers 0:12:16.920 --> 0:12:17.600 closer together. 0:12:18.200 --> 0:12:20.680 Right, So, the big story in the golf in terms 0:12:20.720 --> 0:12:24.920 of intragolf relations before February twenty eighth was there was 0:12:24.960 --> 0:12:28.800 a big Saudi and UAI rift. It was visible, it 0:12:28.920 --> 0:12:31.280 was out in the open. It reminded a lot of 0:12:31.360 --> 0:12:34.920 people of the rift with Katar in twenty seventeen, although 0:12:34.960 --> 0:12:38.360 I didn't think it would escalate to that level. And 0:12:38.400 --> 0:12:43.400 the points of disagreement where basically the two policies, two 0:12:43.400 --> 0:12:48.959 contradictory policies on Yemen, on Libya and on Sudan. I think, 0:12:48.960 --> 0:12:50.720 if you think about the golf, there are so many 0:12:50.720 --> 0:12:52.920 common things in the golf, you know they share. There 0:12:52.840 --> 0:12:57.119 are almost the same ethnicity, same language, same religions, same coastline, 0:12:57.160 --> 0:13:02.040 same geography, even at times, same external threats. But there 0:13:02.040 --> 0:13:04.199 are also points of disagreement. I think if you think 0:13:04.200 --> 0:13:07.760 about the economics, all of these countries are trying to 0:13:08.040 --> 0:13:10.839 diversify away from oil, and they're sort of sometimes they 0:13:10.880 --> 0:13:14.320 overlap on the same sectors at times. They have different 0:13:14.400 --> 0:13:17.040 visions for how to manage the oil wealth, which is 0:13:17.080 --> 0:13:20.680 important and that sometimes shows up in OPEC plus meetings. 0:13:21.360 --> 0:13:25.720 And on the security and national security and geopolitics. There 0:13:25.760 --> 0:13:28.600 is disagreement about the role of political Islam in the region. 0:13:28.880 --> 0:13:31.120 There are disagreements on how to deal with the other 0:13:31.200 --> 0:13:34.800 regional powers Turkey, Iran, and Israel. And there are different 0:13:34.880 --> 0:13:37.960 visions for what to do with the wider region, with Yemen, 0:13:38.200 --> 0:13:41.600 with Sudan, with Libya, and even Egypt than the Horn 0:13:41.679 --> 0:13:45.320 of Africa. So the current state is basically these countries 0:13:45.400 --> 0:13:48.319 have different visions in different paths, and I think even 0:13:48.360 --> 0:13:51.080 after this conflict, there'll be different visions on how to 0:13:51.120 --> 0:13:53.120 deal with the US. The question that Jaw asks, you 0:13:53.160 --> 0:13:54.720 know there is a disappointment in the US. What do 0:13:54.760 --> 0:13:57.120 we do? I think some countries like the UE with 0:13:57.320 --> 0:14:00.840 double down on its relationship with the US and possibly Israel. 0:14:01.520 --> 0:14:03.960 I think a country Lakata will stick to the US 0:14:04.360 --> 0:14:06.600 but tries to create a rift between the US and 0:14:06.720 --> 0:14:09.959 Israel while it has an alliance with Turkey. I think 0:14:10.000 --> 0:14:12.440 if you're Saudi Arabia, where the US wanted from you 0:14:12.840 --> 0:14:16.679 is money, is deals, but also a normalization with Israel 0:14:16.760 --> 0:14:18.680 because every US president thinks that they can get the 0:14:18.720 --> 0:14:21.840 nobel peace price if they deliver that that looks distant 0:14:21.840 --> 0:14:24.680 now in the context of the current war, and Saudi 0:14:24.720 --> 0:14:26.800 had to choose where it aligns itself relative to the 0:14:26.840 --> 0:14:31.040 others Oman is a completely neutral country that is talking 0:14:31.080 --> 0:14:34.200 to everyone and quietly doing things its own way, and 0:14:34.320 --> 0:14:36.640 Bahrain is again somewhere in between. So I think we 0:14:36.720 --> 0:14:39.000 used to think about the Gulf as one entity. This 0:14:39.560 --> 0:14:43.359 these six countries are all monarchies, all in gas producers, 0:14:44.360 --> 0:14:49.200 that have the same foreign relations or foreign relations strategy, 0:14:49.800 --> 0:14:52.480 and it's actually very different now that at least three 0:14:52.560 --> 0:14:53.680 or four sides to it. 0:14:54.040 --> 0:14:56.960 The other point of contention that I think was sort 0:14:56.960 --> 0:14:59.520 of like coming to the fore, although it was never 0:14:59.560 --> 0:15:02.440 as explos some of the foreign policy stuff was it 0:15:02.480 --> 0:15:05.200 felt like everyone was trying to do the same thing 0:15:05.400 --> 0:15:09.240 economically at the same time, which was diversify the economy, 0:15:09.360 --> 0:15:12.360 so not just have oil, but also build up petrochemicals, 0:15:12.840 --> 0:15:17.440 build up toursm build up the technology centers. Everyone's going 0:15:17.480 --> 0:15:19.720 to be, you know, like a big data center play, 0:15:19.800 --> 0:15:21.760 And the question in my mind was always like, well, 0:15:21.920 --> 0:15:24.920 can everyone be doing this at exactly the same time. 0:15:25.560 --> 0:15:28.520 That's that's a great question, Tracy, And possibly the likely 0:15:28.560 --> 0:15:31.360 answer is no, and you're right. So they faced the 0:15:31.360 --> 0:15:35.000 common question, which is basically, their economies are extremely dependent 0:15:35.080 --> 0:15:36.880 on oil and gas. If you look at the exports, 0:15:36.920 --> 0:15:39.760 if you look at government revenues, they're dominated by oil 0:15:39.800 --> 0:15:42.640 and gas. They knew they need to diversify away from this. 0:15:42.720 --> 0:15:45.520 They need to diversify away from this because all prices 0:15:45.720 --> 0:15:49.160 were volatile. Because if all processes drop by fifty percent, 0:15:49.200 --> 0:15:52.000 you can't have your incomes drop by fifty percent without 0:15:52.040 --> 0:15:55.840 adjusting your spending, which is usually painful. So it's good 0:15:55.840 --> 0:15:57.880 to diversify. So what they did is they went to 0:15:58.040 --> 0:16:01.720 consultants and ask them, you know, what sectors should we target, 0:16:02.320 --> 0:16:05.600 and they got the same answer. You should move to petrochemicals, 0:16:05.720 --> 0:16:09.000 you move up the hydrocarbon value chain. You should be 0:16:09.080 --> 0:16:14.200 a financial center, a tourism hub, a logistical hub. And 0:16:14.920 --> 0:16:17.320 now it's called AI. It used to be called knowledge 0:16:17.320 --> 0:16:19.720 based economy and big data at some points. 0:16:20.160 --> 0:16:20.880 For a while there. 0:16:21.040 --> 0:16:24.920 Yeah, the problem with this is you're talking about small 0:16:24.920 --> 0:16:27.920 geography and the same time zone almost So do you 0:16:28.000 --> 0:16:33.200 really need multiple mega airports with multiple global airlines? Probably not. 0:16:33.720 --> 0:16:37.120 Do you need multiple megaports, probably not. You probably need 0:16:37.160 --> 0:16:39.240 one or two. Do you need multiple financial centers. It's 0:16:39.240 --> 0:16:42.000 a financial center in Dubai, another one Abu Dhabi, an 0:16:42.000 --> 0:16:44.640 old one in Manama and Bahrain. Qatar has one, Saudi 0:16:44.680 --> 0:16:47.720 has one. Probably not. You probably just need one. So 0:16:47.760 --> 0:16:50.800 you have this sort of crowding out again tourism. Yes, 0:16:50.960 --> 0:16:53.560 like in January and December, it's beautiful over there. The 0:16:53.600 --> 0:16:55.800 weather is great when the rest of the world is dark, 0:16:55.880 --> 0:16:58.160 cold and rainy. But probably people are not going to 0:16:58.240 --> 0:17:01.080 come and spend you know, six weeks instead of ten 0:17:01.160 --> 0:17:03.160 days there. They're going to split that ten days between 0:17:03.200 --> 0:17:07.159 different countries. So that Chris a form of cannibalization and competition, 0:17:07.760 --> 0:17:11.080 and that asked to basically the intra sort of GCC 0:17:11.320 --> 0:17:14.119 competition which comes to the surface at times. 0:17:14.440 --> 0:17:19.119 Tracy, do you know the name of Cutter's first LNG carrier? 0:17:19.640 --> 0:17:20.960 I have no idea what is it? 0:17:21.040 --> 0:17:23.199 It's a very random trivia question. I came across the 0:17:23.240 --> 0:17:23.640 other day. 0:17:23.760 --> 0:17:25.480 Do you know, No, I don't know. 0:17:25.600 --> 0:17:29.280 Their first LNG carrier is the ship the Rex Tillerson 0:17:29.680 --> 0:17:33.480 because he got involved to end that blockade you talk 0:17:33.560 --> 0:17:36.680 about the twenty seventeen one, So he was the one 0:17:36.720 --> 0:17:39.399 that sort of crafted the diplomatic solution. So it is 0:17:39.440 --> 0:17:41.879 an honor to him their first LNG carrier. 0:17:41.920 --> 0:17:42.800 Then that's amazing. 0:17:42.880 --> 0:17:44.240 Yeah, it's right. 0:17:44.280 --> 0:17:46.840 Now, it wouldn't be the case that Trux Tellison used 0:17:46.840 --> 0:17:50.320 to be the CEO of Excellent, one of the one 0:17:50.359 --> 0:17:53.480 of the early companies that went into the industry. 0:17:53.600 --> 0:17:56.600 There you go, So that's right. So like he you know, 0:17:56.800 --> 0:18:00.360 he's like a patron saint of the country basically, and 0:18:00.400 --> 0:18:03.080 so he got they named the ship after him. Something 0:18:03.200 --> 0:18:07.240 I'm curious about is, you know, you mentioned in your 0:18:07.280 --> 0:18:13.359 first answer this disappointment nightmare scenario because ultimately Trump, despite 0:18:13.920 --> 0:18:17.360 the visits and all this stuff, like went to war 0:18:17.440 --> 0:18:22.360 with Iran. At least it chose the security preferences of Israel. 0:18:22.480 --> 0:18:26.280 Is maybe perhaps a neutral way to put it or 0:18:26.320 --> 0:18:30.720 something like that, that he prioritized Israel's security interests over 0:18:30.800 --> 0:18:33.800 the rest of the region. What I'm curious about is like, Okay, 0:18:33.920 --> 0:18:37.560 so the regional players, they're very disappointed with that, but 0:18:37.600 --> 0:18:40.679 they're probably gonna grit their teeth et cetera, and they'll 0:18:40.720 --> 0:18:43.440 continue to you know, you mentioned you you may double 0:18:43.520 --> 0:18:47.480 down on its US relationship grit their teeth continue. Does 0:18:47.520 --> 0:18:51.399 that create problems though domestically now and even beyond just 0:18:51.520 --> 0:18:55.160 this war obviously the war in Gaza, et cetera. Does 0:18:55.200 --> 0:19:01.119 that create domestic stability problems for these countries? Is just 0:19:01.160 --> 0:19:04.919 in terms of like, why aren't our government taking a 0:19:04.960 --> 0:19:08.439 more confrontational stance on this entire issue. 0:19:08.520 --> 0:19:10.080 I think there's a few things here. I think the 0:19:10.119 --> 0:19:12.159 first thing is is you're right to point out the 0:19:12.480 --> 0:19:14.320 flare up in the Middle East did not start on 0:19:14.320 --> 0:19:17.760 February twenty eighth, twenty twenty six. The Middle East has 0:19:17.800 --> 0:19:21.160 been enormous, constant state of war at least since October 0:19:21.200 --> 0:19:23.879 twenty twenty three. It's just we're feeling it more in 0:19:23.880 --> 0:19:26.080 the global economy because you have the closure of the 0:19:26.119 --> 0:19:29.359 Strait of Hormos, and because energy facilities in the Gulf 0:19:29.400 --> 0:19:32.000 are being hit and it has been weaponized now unlike 0:19:32.640 --> 0:19:36.560 the what was happening before February twenty eighth. I think 0:19:36.560 --> 0:19:41.160 you're also right that what happened in Gaza has definitely 0:19:41.240 --> 0:19:44.120 led to a level of anger and fury in the 0:19:44.200 --> 0:19:47.920 Arab world. That's probably unprecedented, and we've reported and this 0:19:48.080 --> 0:19:51.080 my colleagues San Dagar and others have written about this 0:19:51.119 --> 0:19:55.040 for Bloomberg. I think the Gulf though, is sort of 0:19:55.119 --> 0:19:57.399 different to other states. And the unique thing about the 0:19:57.440 --> 0:19:59.800 Golf from the rest of the Middle East, which is 0:19:59.800 --> 0:20:04.040 why why they were insulated from the volatility in the region, 0:20:04.800 --> 0:20:07.800 is that for the most part, maybe with the exception 0:20:07.880 --> 0:20:11.880 of Saudi Arabia, these are small countries or small populations, 0:20:12.600 --> 0:20:15.679 and at least three of them create the UAE and 0:20:15.760 --> 0:20:20.000 cut or have enormous hydrocarbon wealth relative to the size 0:20:20.000 --> 0:20:24.480 of the population. And if you have that, then that 0:20:24.600 --> 0:20:28.399 can lubricate a lot of things, and that can calm 0:20:28.440 --> 0:20:29.359 a lot of things done. 0:20:29.480 --> 0:20:33.200 That's a very different condition than say Jordan, right, which is. 0:20:33.680 --> 0:20:38.280 Egypt or other places. Yes, that's exactly right. That's the 0:20:38.400 --> 0:20:41.639 unique thing about the God is the level of wealth. 0:20:41.800 --> 0:20:44.680 And I think that's another motivation for why they want 0:20:44.720 --> 0:20:48.359 to diversify away from oil if in the future, because 0:20:48.400 --> 0:20:53.040 all again has not just created an economy and petro 0:20:53.119 --> 0:20:56.720 dollars and sovereign wealth funds and reinvestments into the global economy, 0:20:57.119 --> 0:21:00.480 it has created a political economy, a social contract and 0:21:00.560 --> 0:21:04.800 a political system, and a political system that remains calm 0:21:04.800 --> 0:21:08.320 and stable in the face of a volatile region. And 0:21:08.400 --> 0:21:10.520 what you want to do is to make sure that 0:21:10.600 --> 0:21:12.959 you maintain do Com. You have a source of income 0:21:13.040 --> 0:21:17.560 that maintains dot Com and that cohesiveness when oil becomes 0:21:17.920 --> 0:21:21.080 worthless in the future versus now. And this is why 0:21:21.080 --> 0:21:24.199 you have this big push towards diversification. But I think 0:21:24.240 --> 0:21:26.600 the fact, yeah, the level of wealth versus the size 0:21:26.640 --> 0:21:30.600 of the population creates different dynamics and trade offs versus 0:21:30.680 --> 0:21:32.399 other bigger countries in the region. 0:21:32.920 --> 0:21:35.159 Wait, can we go back to the Rex tillersonship for 0:21:35.200 --> 0:21:37.760 a second, because this is actually a serious question. But 0:21:38.119 --> 0:21:42.480 Katar famously doesn't actually pipe anything through the ground. It 0:21:42.560 --> 0:21:46.080 sends all of its gas out on ships because it 0:21:46.200 --> 0:21:49.800 distrusts its only land border, which is with Saudi Arabia. 0:21:50.560 --> 0:21:53.520 When we're talking about physical changes to the Middle East 0:21:53.520 --> 0:21:56.600 and maybe physical changes in the way that oil actually 0:21:56.640 --> 0:21:59.440 flows out of the region, could we see a situation 0:21:59.560 --> 0:22:03.240 where starts to actually pipesuff through the ground instead of 0:22:03.280 --> 0:22:03.920 just ship it out. 0:22:04.680 --> 0:22:07.879 I mean, this war has exposed something. A couple of 0:22:07.880 --> 0:22:11.120 things are very important. First, that the Middle East Despite 0:22:11.160 --> 0:22:13.640 the rise of renewables, despite the rise of shell oil 0:22:13.720 --> 0:22:18.080 in the US, despite the rise of alternative sources of energy, 0:22:18.200 --> 0:22:21.800 the Middle East is still super important for global energy supplies. 0:22:22.600 --> 0:22:24.720 And the second thing, most of the energy that comes 0:22:24.760 --> 0:22:26.920