1 00:00:03,160 --> 00:00:21,520 Speaker 1: Bloomberg Audio Studios, Podcasts, Radio News. Hello and welcome to 2 00:00:21,560 --> 00:00:24,760 Speaker 1: another episode of the ad Bots podcast. I'm Tracy Alloway 3 00:00:24,800 --> 00:00:27,760 Speaker 1: and I'm Joe Wisenthal. Joe, did you see the big 4 00:00:27,800 --> 00:00:29,920 Speaker 1: headline coming out of Egypt recently? 5 00:00:30,920 --> 00:00:31,200 Speaker 2: Yeah? 6 00:00:31,520 --> 00:00:33,960 Speaker 3: I was kind of blown away by it. So I 7 00:00:33,960 --> 00:00:37,680 Speaker 3: think there's two things that I've seen recently out of Egypt. 8 00:00:38,000 --> 00:00:41,879 Speaker 3: One is they've they're letting the Egyptian pound flow. They 9 00:00:41,880 --> 00:00:44,120 Speaker 3: already have all and so the Egyptian pound has fallen 10 00:00:44,159 --> 00:00:48,360 Speaker 3: to record lows. And then they have this huge deal 11 00:00:48,920 --> 00:00:51,879 Speaker 3: with the UAE to develop a piece of property and 12 00:00:51,960 --> 00:00:54,640 Speaker 3: it almost sounds like, and I don't think it's exactly 13 00:00:54,680 --> 00:00:57,120 Speaker 3: the case, but it almost sounds like when you read 14 00:00:57,120 --> 00:00:59,480 Speaker 3: about it, like the UAE basically just bought a big 15 00:00:59,520 --> 00:00:59,720 Speaker 3: part of. 16 00:00:59,720 --> 00:01:04,600 Speaker 1: Eachypt Ooh that's punchy, But you're right, Like, Noah, wrong, 17 00:01:05,800 --> 00:01:08,039 Speaker 1: I should have specified at the beginning because there have 18 00:01:08,240 --> 00:01:10,679 Speaker 1: been a number of headlines and it's kind of interesting 19 00:01:10,720 --> 00:01:14,160 Speaker 1: because they're all feeding into each other. So I think 20 00:01:14,280 --> 00:01:18,000 Speaker 1: last month the UAE unveiled this announcement that it was 21 00:01:18,040 --> 00:01:21,480 Speaker 1: investing thirty five billion dollars in a place in Egypt 22 00:01:21,520 --> 00:01:25,679 Speaker 1: on the Mediterranean coast called rassel Hekma, and the idea 23 00:01:26,040 --> 00:01:29,959 Speaker 1: was to develop new tourism and real estate. But of 24 00:01:30,000 --> 00:01:34,160 Speaker 1: course that investment comes at a really sensitive time for Egypt. 25 00:01:34,240 --> 00:01:37,800 Speaker 1: The economy hasn't been doing too well, Inflation has been high, 26 00:01:38,120 --> 00:01:41,679 Speaker 1: and so what we've seen since that announcement is that 27 00:01:41,959 --> 00:01:45,840 Speaker 1: the Egyptian Central Bank was able to high crates finally, 28 00:01:45,920 --> 00:01:48,640 Speaker 1: and then to your point, they were able to free 29 00:01:48,640 --> 00:01:53,600 Speaker 1: float the Egyptian pound, and then the IMF felt much 30 00:01:53,680 --> 00:01:57,080 Speaker 1: better about the direction of the Egyptian economy, and so 31 00:01:57,280 --> 00:02:02,440 Speaker 1: they ended up increasing their own financing for Egypt. I 32 00:02:02,480 --> 00:02:04,640 Speaker 1: think it went from like three billion dollars to eight 33 00:02:04,680 --> 00:02:08,200 Speaker 1: billion dollars. And so when you combine all of these things, 34 00:02:08,240 --> 00:02:12,160 Speaker 1: which have basically happened in less than a month, you've 35 00:02:12,200 --> 00:02:15,400 Speaker 1: seen kind of a turnaround in how people are feeling 36 00:02:15,480 --> 00:02:18,680 Speaker 1: about the Egyptian economy. I'm looking at spreads on Egyptian 37 00:02:18,680 --> 00:02:20,919 Speaker 1: bonds right now and they have come in quite a lot. 38 00:02:21,160 --> 00:02:24,640 Speaker 3: Right well, They've gotten a huge injection of cash, and 39 00:02:24,680 --> 00:02:27,520 Speaker 3: I feel as though this story is at the intersection 40 00:02:27,680 --> 00:02:30,799 Speaker 3: of a few different things. As you've mentioned, the Golf 41 00:02:30,960 --> 00:02:36,720 Speaker 3: States seem really into real estate, megaprojects these days, whether 42 00:02:36,760 --> 00:02:39,440 Speaker 3: it's Saudi or the UAE, et cetera. And so this 43 00:02:39,560 --> 00:02:44,400 Speaker 3: is apparently another opportunity to build some gigantic modern city 44 00:02:44,560 --> 00:02:49,280 Speaker 3: of the future. Egypt itself has of course come under strained, 45 00:02:49,320 --> 00:02:52,600 Speaker 3: particularly since I don't know, maybe it's like the triple 46 00:02:52,800 --> 00:02:56,720 Speaker 3: shock of COVID, the war in Ukraine and the surgeon 47 00:02:56,760 --> 00:02:59,600 Speaker 3: wheat prices. We know Egypt is a really big wheat importer, 48 00:03:00,080 --> 00:03:04,399 Speaker 3: and then also obviously strains from the war in Gaza, 49 00:03:04,840 --> 00:03:08,760 Speaker 3: and like many ems, it's just generally been understrained and 50 00:03:08,919 --> 00:03:11,040 Speaker 3: needed help from the IMF. And so this sort of 51 00:03:11,040 --> 00:03:14,360 Speaker 3: feels like a story that sort of multiple things happening once, 52 00:03:14,440 --> 00:03:16,480 Speaker 3: multiple things coming together at the same time. 53 00:03:16,560 --> 00:03:21,079 Speaker 1: Well, it's also happening against a very intense political background 54 00:03:21,480 --> 00:03:27,200 Speaker 1: and the complicated web of I guess influence in this 55 00:03:27,280 --> 00:03:31,160 Speaker 1: particular region is something that we could probably spend hours 56 00:03:31,160 --> 00:03:33,360 Speaker 1: and hours and hours on. You want to hear my 57 00:03:33,440 --> 00:03:36,920 Speaker 1: framework for understanding this, I always think about it in 58 00:03:37,040 --> 00:03:43,320 Speaker 1: terms of mean girls, like everyone's frenemies. But I guess 59 00:03:43,480 --> 00:03:49,360 Speaker 1: Abu Dhabi MBZ is basically Regina George and Saudi Arabia 60 00:03:49,600 --> 00:03:53,400 Speaker 1: NBS is sort of Karen Smith, and that makes Katar 61 00:03:53,880 --> 00:03:57,520 Speaker 1: Gretchen Wiener because her hair is big and full of secrets. 62 00:03:58,040 --> 00:04:00,000 Speaker 1: And then I guess, I guess Egypt is now Lens 63 00:04:00,200 --> 00:04:02,480 Speaker 1: Lohan because people are trying to get her on board. 64 00:04:02,560 --> 00:04:03,520 Speaker 3: Amazing. I love it. 65 00:04:03,640 --> 00:04:07,760 Speaker 1: I think about this a lot weirdly. Okay, so maybe 66 00:04:08,000 --> 00:04:10,040 Speaker 1: we should just bring on our guests. So we do, 67 00:04:10,160 --> 00:04:12,720 Speaker 1: in fact have the perfect guest, someone we've been meaning 68 00:04:12,760 --> 00:04:16,040 Speaker 1: to get on the podcast for a long time. I 69 00:04:16,120 --> 00:04:18,840 Speaker 1: worked with him when I was based in Abu Dhabi 70 00:04:18,920 --> 00:04:20,679 Speaker 1: and I used to go to Dubai quite a lot. 71 00:04:20,880 --> 00:04:24,200 Speaker 1: We are going to be speaking with Bloomberg Economics chief 72 00:04:24,240 --> 00:04:29,120 Speaker 1: Emerging Markets economist Zia Dowd. Zied is one of the 73 00:04:29,279 --> 00:04:33,160 Speaker 1: smartest people I know when it comes to Middle Eastern economics, 74 00:04:33,240 --> 00:04:37,520 Speaker 1: and he has a piece out on Bloomberg our New 75 00:04:37,560 --> 00:04:41,760 Speaker 1: Big Take all about this particular topic. What does this 76 00:04:41,880 --> 00:04:46,120 Speaker 1: thirty five billion dollar injection actually mean for Egypt and 77 00:04:46,200 --> 00:04:48,720 Speaker 1: for the wider Middle East? So Zed, thank you so 78 00:04:48,800 --> 00:04:50,760 Speaker 1: much for coming on all thoughts. 79 00:04:50,520 --> 00:04:52,480 Speaker 2: Thank you Tracy, and thank you Joe. It's a pleasure 80 00:04:52,520 --> 00:04:53,000 Speaker 2: to be with you. 81 00:04:53,640 --> 00:04:56,200 Speaker 1: I'm going to start with the really basic question, which 82 00:04:56,279 --> 00:04:59,480 Speaker 1: is what do we know about this thirty five billion 83 00:04:59,520 --> 00:05:03,000 Speaker 1: dollar injection. So my understanding is that it was divided 84 00:05:03,080 --> 00:05:05,960 Speaker 1: up into tranches. One of those has been paid at 85 00:05:05,960 --> 00:05:08,760 Speaker 1: this point. But what do we know about the intended 86 00:05:08,920 --> 00:05:12,520 Speaker 1: use of this money and whether or not it comes 87 00:05:12,560 --> 00:05:14,520 Speaker 1: with conditions or strings. 88 00:05:14,800 --> 00:05:18,240 Speaker 2: Well, we know three things about this thirty five billion dollars. One, 89 00:05:18,320 --> 00:05:22,000 Speaker 2: we know it's a huge amount of money. Thirty five 90 00:05:22,040 --> 00:05:25,640 Speaker 2: billion dollars. Just for perspective, Egypt was trying to agree 91 00:05:25,680 --> 00:05:28,559 Speaker 2: a deal with the IMF throughout last year. The size 92 00:05:28,560 --> 00:05:31,040 Speaker 2: of that was three billion dollars. You know, thirty five 93 00:05:31,120 --> 00:05:34,240 Speaker 2: is much bigger than three. When the IMF deal got 94 00:05:34,320 --> 00:05:36,719 Speaker 2: much larger, it ended up being eight billion dollars. So 95 00:05:36,760 --> 00:05:39,520 Speaker 2: thirty five again, it's huge. Thirty five billion dollars is 96 00:05:39,520 --> 00:05:43,039 Speaker 2: more than Egypt has for an exchange reserve, and even 97 00:05:43,080 --> 00:05:45,600 Speaker 2: for a rich country like the UAE, and it is 98 00:05:45,640 --> 00:05:49,040 Speaker 2: a rich country. Thirty five billion dollars is seven percent 99 00:05:49,080 --> 00:05:52,120 Speaker 2: of GDP, so it's a significant amount of money. So 100 00:05:52,160 --> 00:05:55,200 Speaker 2: that's what we's that's the first thing we know about it. 101 00:05:55,600 --> 00:05:57,240 Speaker 2: The second thing we know about it is that the 102 00:05:57,279 --> 00:06:00,440 Speaker 2: money is arriving over a short period of time. You know, 103 00:06:00,480 --> 00:06:02,880 Speaker 2: when you do an IMFTL, you do it over multi 104 00:06:03,279 --> 00:06:07,120 Speaker 2: multiple years. This one is coming within two months. So again, 105 00:06:07,200 --> 00:06:10,239 Speaker 2: the UAE is shifting seven percent, the equivalent of seven 106 00:06:10,240 --> 00:06:13,479 Speaker 2: percent of the GDP to Egypt in the space of 107 00:06:13,560 --> 00:06:16,560 Speaker 2: two months, and that is fairly fairly rapid. And we're 108 00:06:16,560 --> 00:06:18,599 Speaker 2: talking about real money here. You know, the thirty five 109 00:06:18,600 --> 00:06:22,360 Speaker 2: billion twenty four billion dollars is fresh cash, and eleven 110 00:06:22,400 --> 00:06:26,960 Speaker 2: billion dollars is basically a conversion of existing deposits for 111 00:06:27,000 --> 00:06:30,400 Speaker 2: the UAE at the Egyptian Central Banks that's going to 112 00:06:30,400 --> 00:06:33,760 Speaker 2: be converted into investments. And the third thing we know 113 00:06:33,839 --> 00:06:35,919 Speaker 2: about this is that all these investments are going to 114 00:06:35,920 --> 00:06:38,800 Speaker 2: be real estate investments. So the UAE is going to 115 00:06:38,800 --> 00:06:41,680 Speaker 2: buy a big piece of land on Egypt's north coast 116 00:06:41,760 --> 00:06:44,760 Speaker 2: called Russell Hekma, and on top of this, it will 117 00:06:44,760 --> 00:06:47,480 Speaker 2: invest in other real estate projects. So it's big, it's 118 00:06:47,560 --> 00:06:49,320 Speaker 2: arriving in a short period of time, and it's going 119 00:06:49,360 --> 00:06:50,720 Speaker 2: to be real estate investments. 120 00:06:51,240 --> 00:06:54,080 Speaker 3: I want to get to obviously what the UAE is 121 00:06:54,320 --> 00:06:56,560 Speaker 3: ultimately getting out of this deal or why it's made that. 122 00:06:56,680 --> 00:06:59,279 Speaker 3: But actually I want to ask one more step back question, 123 00:06:59,400 --> 00:07:02,159 Speaker 3: which is, you know, in normal times and I don't 124 00:07:02,160 --> 00:07:04,920 Speaker 3: know what counts as normal times anymore. Let's just start 125 00:07:04,920 --> 00:07:07,560 Speaker 3: out of your like twenty eighteen, like, what is the 126 00:07:07,600 --> 00:07:08,799 Speaker 3: Egyptian economy? 127 00:07:08,880 --> 00:07:10,960 Speaker 1: I didn't say, Joe, that was the last time I 128 00:07:11,040 --> 00:07:13,360 Speaker 1: was in the UAE, So thank you for choosing that 129 00:07:13,400 --> 00:07:14,520 Speaker 1: as your pinnaclet of normal. 130 00:07:15,320 --> 00:07:18,120 Speaker 3: That was the cutoff. When Tracy left, everything started to 131 00:07:18,160 --> 00:07:19,080 Speaker 3: go off the rails. 132 00:07:19,280 --> 00:07:20,680 Speaker 2: But in normal. 133 00:07:20,400 --> 00:07:24,640 Speaker 3: Times, what is the Egyptian economy like? And what has 134 00:07:24,760 --> 00:07:28,280 Speaker 3: happened to it since then that has caused it to 135 00:07:28,440 --> 00:07:29,880 Speaker 3: go into such distress? 136 00:07:30,880 --> 00:07:34,120 Speaker 2: Right, So let's start from the beginning. For a very 137 00:07:34,120 --> 00:07:36,680 Speaker 2: ancient country like Egypt, the beginning to two thousands years ago, 138 00:07:36,800 --> 00:07:38,920 Speaker 2: so we let's not go there. So let's start from 139 00:07:38,920 --> 00:07:39,440 Speaker 2: twenty sixteen. 140 00:07:39,480 --> 00:07:45,400 Speaker 1: Oh, very potent as yeah, many thousands of millennia a girl, Yeah. 141 00:07:45,320 --> 00:07:48,040 Speaker 2: We're not going to do that. So twenty sixteen Egypt 142 00:07:48,080 --> 00:07:51,160 Speaker 2: had the research, it had the recent Politically, it had 143 00:07:51,200 --> 00:07:53,880 Speaker 2: a newly elected president after Fantasti's not in that year, 144 00:07:53,920 --> 00:07:56,440 Speaker 2: but he was elected a couple of years earlier, and 145 00:07:56,480 --> 00:07:59,160 Speaker 2: he had a lot of political capital, so there was 146 00:07:59,200 --> 00:08:02,559 Speaker 2: a lot of political soport for presidency c at the time. 147 00:08:02,840 --> 00:08:06,120 Speaker 2: But it also had an economic reset in late twenty sixteen, 148 00:08:06,640 --> 00:08:10,360 Speaker 2: Egypt almost started on a clean state from an economic perspective. 149 00:08:11,120 --> 00:08:15,040 Speaker 2: It basically devalued the currency by fifty percent. It agreed 150 00:08:15,040 --> 00:08:19,200 Speaker 2: a deal with the IMF, it removed some subsidies on fuel, 151 00:08:19,640 --> 00:08:22,960 Speaker 2: and it became the darling of global financial markets. It 152 00:08:23,080 --> 00:08:26,360 Speaker 2: was the biggest carry trade in the world. So what 153 00:08:26,440 --> 00:08:28,720 Speaker 2: was Egypt doing at the time it devalued the currency. 154 00:08:28,840 --> 00:08:33,480 Speaker 2: There's limited downside risk to carry traders. You know, if 155 00:08:33,480 --> 00:08:36,160 Speaker 2: you're going into Egypt, you get high interest rate in 156 00:08:36,240 --> 00:08:39,600 Speaker 2: a world that was offering zero to negative interest rates, 157 00:08:40,000 --> 00:08:43,120 Speaker 2: and you have limited currency risk because the currency had 158 00:08:43,160 --> 00:08:46,760 Speaker 2: moved a lot, and because the country had ensured that 159 00:08:47,160 --> 00:08:50,600 Speaker 2: carry traders essentially can take their money out of the country. 160 00:08:51,400 --> 00:08:54,880 Speaker 2: So a lot of money flowed into Egypt in terms 161 00:08:54,920 --> 00:08:59,079 Speaker 2: of short term debt, and that lasted between twenty seventeen 162 00:08:59,120 --> 00:09:02,560 Speaker 2: and twenty twenty. And yes, Egypt has been unlucky with 163 00:09:02,600 --> 00:09:06,079 Speaker 2: a few global shocks, Joey, You've mentioned already. There was COVID, 164 00:09:06,440 --> 00:09:08,920 Speaker 2: there was the Russia Ukraine war, and there was there 165 00:09:09,000 --> 00:09:12,240 Speaker 2: is the war in Gaza, and also the US interest 166 00:09:12,320 --> 00:09:15,679 Speaker 2: rate heives which were significant. But also I think there 167 00:09:15,679 --> 00:09:18,439 Speaker 2: were policy mistakes in Egypt. There was the fact that 168 00:09:18,480 --> 00:09:22,240 Speaker 2: there was massive reliance on this hot money influence, and 169 00:09:22,320 --> 00:09:26,240 Speaker 2: these do reverse fairly quickly. There there has been a 170 00:09:26,280 --> 00:09:29,800 Speaker 2: growing role for the army in the economy, which prevented 171 00:09:29,880 --> 00:09:32,800 Speaker 2: more stable funding to go into Egypt and prevented the 172 00:09:32,800 --> 00:09:36,200 Speaker 2: country from exporting more so, it was still running a 173 00:09:36,240 --> 00:09:39,120 Speaker 2: trade deficit that had to finance, and the only source 174 00:09:39,160 --> 00:09:42,120 Speaker 2: of financing that was available was this hot money influence. 175 00:09:42,960 --> 00:09:45,920 Speaker 2: So there's reliance on hot money. There was the army 176 00:09:46,000 --> 00:09:50,200 Speaker 2: role in the economy. Egypt actually effectively after the fifty 177 00:09:50,200 --> 00:09:54,320 Speaker 2: percent evaluation of late twenty sixteen, almost repecked the currency 178 00:09:54,320 --> 00:09:56,440 Speaker 2: to the dollars, so it didn't allow the exchange rate 179 00:09:56,840 --> 00:09:59,440 Speaker 2: to move in a free way and absorb the shocks. 180 00:09:59,559 --> 00:10:03,080 Speaker 2: So you can buy these policy mistakes with the unfortunate 181 00:10:03,120 --> 00:10:08,520 Speaker 2: global shocks, and Egypt looked very vulnerable starting twenty twenty two. 182 00:10:09,040 --> 00:10:12,319 Speaker 1: So I definitely want to get into the why, and 183 00:10:12,600 --> 00:10:15,640 Speaker 1: I have a feeling the next question probably feeds into 184 00:10:15,679 --> 00:10:18,040 Speaker 1: that anyway. But one thing I wanted to ask you 185 00:10:18,080 --> 00:10:22,800 Speaker 1: about is this investment. This thirty five billion isn't coming 186 00:10:23,000 --> 00:10:27,120 Speaker 1: from the Abu Dhabi Sovereign Wealth Fund that I would 187 00:10:27,160 --> 00:10:31,240 Speaker 1: normally think of making these huge investments, so that would 188 00:10:31,240 --> 00:10:34,920 Speaker 1: be Adia. And I cannot emphasize how big a deal 189 00:10:35,080 --> 00:10:37,679 Speaker 1: Adia was. When I was in the UAE, there was 190 00:10:37,760 --> 00:10:41,320 Speaker 1: this whole sort of mythology built up around it. But 191 00:10:42,120 --> 00:10:46,960 Speaker 1: this investment is coming from a new SWF called ADQ. 192 00:10:47,200 --> 00:10:50,360 Speaker 1: Can you talk a little bit about that and how 193 00:10:50,360 --> 00:10:53,240 Speaker 1: it's supposed to be different to Adia, like what the 194 00:10:53,280 --> 00:10:54,360 Speaker 1: different purposes are. 195 00:10:55,960 --> 00:10:58,880 Speaker 2: So the UAE abu W in particular when you used 196 00:10:58,880 --> 00:11:03,800 Speaker 2: to give tracy has multiple sovereign wealth funds. They have 197 00:11:03,960 --> 00:11:09,280 Speaker 2: different chairpersons sharing them. Mostly they belonged to the ruling family. 198 00:11:09,960 --> 00:11:12,760 Speaker 2: I think the division of labor is not clear to me. 199 00:11:13,320 --> 00:11:16,520 Speaker 2: But what is clear is that this new sovereign wealth fund, ADQ, 200 00:11:16,720 --> 00:11:19,880 Speaker 2: which is different from Adia, different from MOBADERA the other 201 00:11:19,920 --> 00:11:23,240 Speaker 2: two sovereign wealth funds, has been very active in Egypt recently. 202 00:11:23,880 --> 00:11:27,000 Speaker 2: So it was the one which entered this land sale 203 00:11:27,040 --> 00:11:30,560 Speaker 2: d the thirty five billion dollar development deal, but it's 204 00:11:30,600 --> 00:11:32,480 Speaker 2: also has been active in Egypt lately. So in the 205 00:11:32,559 --> 00:11:36,760 Speaker 2: last few years, since twenty twenty two, ADQ has bought 206 00:11:37,360 --> 00:11:45,360 Speaker 2: state stakes and Egyptian firms as varied as insectors like fertilizers, banks, fintech, 207 00:11:45,800 --> 00:11:49,400 Speaker 2: the tobacco company. And actually, if you look at the 208 00:11:49,440 --> 00:11:51,520 Speaker 2: Egyptian stock index and you look at the top three 209 00:11:51,559 --> 00:11:54,960 Speaker 2: companies in that index, the top one is a cib 210 00:11:55,120 --> 00:11:58,320 Speaker 2: A bank and a company that is part of the 211 00:11:58,360 --> 00:12:03,080 Speaker 2: Sovereign Wealth Fund ADQ largest shareholder. The third largest company 212 00:12:03,160 --> 00:12:06,640 Speaker 2: in the Egyptian stock index is Eastern Tobacco Company, and 213 00:12:06,679 --> 00:12:10,600 Speaker 2: again the biggest shareholder is ADQ, and the second largest 214 00:12:10,600 --> 00:12:14,079 Speaker 2: company is a construction company called Talatmostava with a very 215 00:12:14,080 --> 00:12:18,439 Speaker 2: interesting history, especially with relation to the UAE. Is basically 216 00:12:18,679 --> 00:12:21,000 Speaker 2: is the one that is acting as the middleman for 217 00:12:21,280 --> 00:12:25,600 Speaker 2: all these ADQ deals, including the recent thirty five billion 218 00:12:25,679 --> 00:12:29,319 Speaker 2: dollar deal. But also Egypt recently sold a few historic hotels, 219 00:12:29,559 --> 00:12:33,560 Speaker 2: which Palatmostafa Group was a co investor and a middleman 220 00:12:33,600 --> 00:12:37,160 Speaker 2: for these deals. So ADQ seems very active in Egypt 221 00:12:37,679 --> 00:12:40,079 Speaker 2: and its yeah, it's brokering all these deals there. 222 00:12:40,480 --> 00:12:44,000 Speaker 3: So let's talk then about this deal, like how much 223 00:12:44,040 --> 00:12:48,000 Speaker 3: potential is there? What can the UAE get for thirty 224 00:12:48,000 --> 00:12:48,720 Speaker 3: five billion. 225 00:12:49,520 --> 00:12:51,800 Speaker 2: It's a lot of money. And when the Prime Minister 226 00:12:52,200 --> 00:12:55,120 Speaker 2: of Egypt had the press conference when he announced the deal, 227 00:12:55,120 --> 00:12:56,720 Speaker 2: he said, you know what, this is going to be 228 00:12:56,880 --> 00:13:00,720 Speaker 2: a global touristic destination. We will probably get eight million 229 00:13:00,800 --> 00:13:04,440 Speaker 2: people coming to this area of land. It's not just 230 00:13:04,520 --> 00:13:07,120 Speaker 2: going to be a city. It's gonna be gonna have yachts. 231 00:13:07,160 --> 00:13:10,600 Speaker 2: You're gonna have all sorts of things and tourism all 232 00:13:10,600 --> 00:13:13,480 Speaker 2: around the year. But I think it's something. 233 00:13:13,600 --> 00:13:15,599 Speaker 1: I like how you say it's not just gonna be 234 00:13:15,640 --> 00:13:19,440 Speaker 1: a mega city. It's also gonna have yachts. 235 00:13:20,040 --> 00:13:22,080 Speaker 3: I saw this great video, and it's gonna have amusement 236 00:13:22,160 --> 00:13:25,760 Speaker 3: parks and a clean energy corridor and a light industrial 237 00:13:25,880 --> 00:13:28,080 Speaker 3: hub and anyway, sorry, keep going. 238 00:13:28,200 --> 00:13:32,640 Speaker 2: Actually, interestingly, it's also adjacent, actually very close to Egypt's 239 00:13:32,760 --> 00:13:35,640 Speaker 2: nuclear power plant called the Dabba, and he actually mentioned 240 00:13:35,679 --> 00:13:38,200 Speaker 2: it and he said it might provide clean energy to 241 00:13:38,320 --> 00:13:42,800 Speaker 2: the area, megacity, whatever it is. But I think I 242 00:13:42,800 --> 00:13:45,920 Speaker 2: think if you look at it, it's just difficult just 243 00:13:46,000 --> 00:13:49,680 Speaker 2: to see. That's just all about economics. I think the 244 00:13:49,679 --> 00:13:51,480 Speaker 2: first item is if you look at you know, the 245 00:13:51,559 --> 00:13:54,200 Speaker 2: average price of land in that area and what the 246 00:13:54,320 --> 00:13:57,720 Speaker 2: UAE paid. It wasn't a fire sell. If anything, it 247 00:13:57,840 --> 00:14:00,240 Speaker 2: might have been the UAE might have been generous, and 248 00:14:00,280 --> 00:14:04,120 Speaker 2: the money that it paid to Egypt. So that's the 249 00:14:04,120 --> 00:14:07,160 Speaker 2: first item, and I think it's second item. If you 250 00:14:07,200 --> 00:14:09,880 Speaker 2: think about the narrative of why Egypt got into trouble, 251 00:14:09,880 --> 00:14:13,199 Speaker 2: into the slatest crisis, the simplest thing, that one sentence 252 00:14:13,240 --> 00:14:17,120 Speaker 2: sort of narrative is that Egypt borrowed extensively and in 253 00:14:17,200 --> 00:14:21,320 Speaker 2: short term from financial markets abroad and built a new 254 00:14:21,360 --> 00:14:24,320 Speaker 2: capital city that had limited economic critter. Right, So this 255 00:14:24,400 --> 00:14:26,920 Speaker 2: is the one center summary of what happened to Egypt 256 00:14:27,040 --> 00:14:30,880 Speaker 2: between twenty seventeen and today. Now. It is very odd 257 00:14:31,240 --> 00:14:33,840 Speaker 2: and I say that in the Odd Lost podcasts that 258 00:14:33,920 --> 00:14:36,280 Speaker 2: the solution to building a megacity is to build another 259 00:14:36,320 --> 00:14:39,720 Speaker 2: megacity which is even further away from the capital. So 260 00:14:39,840 --> 00:14:42,160 Speaker 2: I think it's not about the economics, and we can 261 00:14:42,240 --> 00:14:46,040 Speaker 2: think about what is there in terms of non economic 262 00:14:46,560 --> 00:14:49,800 Speaker 2: benefits that Egypt can provide, and I think the biggest 263 00:14:49,800 --> 00:14:54,440 Speaker 2: one is basically stability. The region is already unstable. If 264 00:14:54,440 --> 00:14:57,400 Speaker 2: you look at Egypt's west, there is Libya and it's 265 00:14:57,440 --> 00:15:00,440 Speaker 2: completely unstable. Egypt south there is Sudan and again there's 266 00:15:00,480 --> 00:15:03,480 Speaker 2: an internal civil war and Egypt is there is Gaza 267 00:15:03,520 --> 00:15:05,720 Speaker 2: and there's an ongoing war that is that is brutal 268 00:15:05,760 --> 00:15:07,440 Speaker 2: and that's probably going to shape them in the least 269 00:15:07,760 --> 00:15:10,640 Speaker 2: in the coming years. So I think the stability of 270 00:15:10,680 --> 00:15:16,000 Speaker 2: Egypt is important. I think the UAE is very conscious 271 00:15:16,040 --> 00:15:20,640 Speaker 2: about not allowing, for example, Islamist groups to be in power, 272 00:15:20,960 --> 00:15:24,120 Speaker 2: and maybe they think that kind of investment would prevent 273 00:15:24,400 --> 00:15:27,360 Speaker 2: such thing from happening. But it's clearly something beyond the 274 00:15:27,400 --> 00:15:30,120 Speaker 2: economics of this, because the economics, yes, you can, you 275 00:15:30,160 --> 00:15:33,480 Speaker 2: can make a case there, but it's not full. It 276 00:15:33,520 --> 00:15:37,040 Speaker 2: doesn't tell you the full picture. And whatever the economics is, 277 00:15:37,120 --> 00:15:39,040 Speaker 2: we just talked about the size of it. Seven percent 278 00:15:39,080 --> 00:15:42,080 Speaker 2: of GDP, the ue sending seven percent of GDP in 279 00:15:42,160 --> 00:15:46,080 Speaker 2: two months to Egypt to do to invest in Egypt 280 00:15:46,160 --> 00:15:47,760 Speaker 2: real the state. That is significant. 281 00:16:04,160 --> 00:16:08,960 Speaker 1: I appreciate your summary of Egypt's economic situation earlier since 282 00:16:09,040 --> 00:16:12,680 Speaker 1: twenty sixteen slash twenty seventeen, there is an event that 283 00:16:12,760 --> 00:16:15,720 Speaker 1: I think lives sort of rent free in a lot 284 00:16:15,760 --> 00:16:20,880 Speaker 1: of UAE rulers' heads, which is the twenty eleven Day 285 00:16:21,120 --> 00:16:25,760 Speaker 1: of Revolt in Egypt or the Arab uprising elsewhere. And 286 00:16:25,800 --> 00:16:29,480 Speaker 1: I think there is also that element sort of hovering 287 00:16:29,600 --> 00:16:32,640 Speaker 1: in the background. But one thing I wanted to ask you, 288 00:16:33,600 --> 00:16:39,240 Speaker 1: how much of this is coming from geostrategic considerations. So 289 00:16:39,320 --> 00:16:42,120 Speaker 1: the idea that okay, maybe you're going to develop a 290 00:16:42,400 --> 00:16:46,920 Speaker 1: tourist city on the Mediterranean coast in Egypt, but maybe 291 00:16:46,960 --> 00:16:51,240 Speaker 1: you're also sort of building up a trade network in 292 00:16:51,280 --> 00:16:54,960 Speaker 1: a kind of like China Belt and Road type way. 293 00:16:55,160 --> 00:16:58,440 Speaker 1: Maybe you're building up a strategic bulkhead in that area 294 00:16:58,480 --> 00:17:00,239 Speaker 1: as well. 295 00:17:00,280 --> 00:17:02,760 Speaker 2: Perhaps, I think I think there's three elements here. There's 296 00:17:02,800 --> 00:17:04,920 Speaker 2: the commercial side of it, and we've talked about it, 297 00:17:05,680 --> 00:17:08,600 Speaker 2: and there is the trade side of it. But then 298 00:17:08,600 --> 00:17:10,879 Speaker 2: if you think about that, I mean the last G 299 00:17:11,000 --> 00:17:12,639 Speaker 2: twenty in August. I don't know if it's the last one, 300 00:17:12,680 --> 00:17:15,840 Speaker 2: but the G twenty last August, there was a memoranda 301 00:17:15,880 --> 00:17:19,880 Speaker 2: of understanding that was signed to have a trade corridor 302 00:17:20,119 --> 00:17:24,160 Speaker 2: between India, the Middle East and Europe. Right, so that's 303 00:17:24,200 --> 00:17:27,359 Speaker 2: goes from India to the UAE, through Saudi Arabia, Israel 304 00:17:27,600 --> 00:17:30,119 Speaker 2: and all the way to Europe. And that was only 305 00:17:30,440 --> 00:17:34,400 Speaker 2: signed as a memorandum understanding in August. So to think 306 00:17:34,440 --> 00:17:38,480 Speaker 2: about doing another trade route, maybe maybe there's some logic there, 307 00:17:38,840 --> 00:17:42,960 Speaker 2: but you start to make progress on that initial project 308 00:17:43,040 --> 00:17:45,840 Speaker 2: first before you had there. I think there is a 309 00:17:46,160 --> 00:17:49,080 Speaker 2: geopolitical side of this as well, if you think about 310 00:17:49,119 --> 00:17:52,600 Speaker 2: the ongoing war in Gaza, you know that Gaza has 311 00:17:52,640 --> 00:17:55,240 Speaker 2: two borders, one with Israel and one with Egypt, and 312 00:17:55,320 --> 00:17:58,200 Speaker 2: Egypt will clearly play a role in the future of Gaza. 313 00:17:58,440 --> 00:18:02,240 Speaker 2: And maybe this is a way to flex muscle UAE 314 00:18:02,400 --> 00:18:05,560 Speaker 2: muscle in Egypt and to ensure that in case of 315 00:18:05,640 --> 00:18:08,919 Speaker 2: future agreements over the future of Gaza, Egypt will side 316 00:18:09,320 --> 00:18:13,280 Speaker 2: with basically the country that got it out of its crisis. 317 00:18:14,160 --> 00:18:16,160 Speaker 1: There's one other thing I wanted to ask you, and 318 00:18:16,680 --> 00:18:19,440 Speaker 1: I don't think it's verging on conspiracy theory, but it's 319 00:18:19,440 --> 00:18:23,520 Speaker 1: definitely speculative, and it kind of goes back to Abu 320 00:18:23,600 --> 00:18:30,000 Speaker 1: Dhabi making a push into petrochemicals, renewable energy, things like that. 321 00:18:30,040 --> 00:18:33,240 Speaker 1: We've seen it make these moves because it kind of 322 00:18:33,280 --> 00:18:38,000 Speaker 1: wants to diversify away from pure oil extraction and move 323 00:18:38,080 --> 00:18:41,959 Speaker 1: into more value add processing that sort of thing. But 324 00:18:42,359 --> 00:18:46,560 Speaker 1: I think this particular area of Egypt sits kind of 325 00:18:46,640 --> 00:18:51,400 Speaker 1: right above the world's biggest sinkhole, and I have totally 326 00:18:52,080 --> 00:18:56,119 Speaker 1: forgotten its name, but there's been some discussion at various 327 00:18:56,160 --> 00:19:00,920 Speaker 1: points in time of developing that area into either mining 328 00:19:00,960 --> 00:19:05,919 Speaker 1: it for critical minerals or putting like using it to 329 00:19:06,000 --> 00:19:09,119 Speaker 1: generate electricity, or maybe like building a pipeline from the 330 00:19:09,160 --> 00:19:11,960 Speaker 1: Mediterranean or something like that. Do you think those sort 331 00:19:12,000 --> 00:19:14,400 Speaker 1: of energy considerations play into this at all. 332 00:19:15,359 --> 00:19:18,200 Speaker 2: They weren't mentioned, so I think the first when when 333 00:19:18,359 --> 00:19:20,639 Speaker 2: when the deal was announced, a few things were mentioned 334 00:19:20,640 --> 00:19:25,400 Speaker 2: that these beaches are very pristine, they are virgin and undiscovered, 335 00:19:25,920 --> 00:19:28,640 Speaker 2: and it's going to be a touristic attraction. I think 336 00:19:28,680 --> 00:19:32,440 Speaker 2: then doing mining would probably undermine that sort of touristic 337 00:19:32,480 --> 00:19:36,160 Speaker 2: attraction side of it, I think to the broader question 338 00:19:36,320 --> 00:19:38,959 Speaker 2: of energy and and maybe this is just a bit 339 00:19:39,000 --> 00:19:41,359 Speaker 2: of a digression, but I think within the region you 340 00:19:41,440 --> 00:19:44,080 Speaker 2: might see that you know from Afar that the the 341 00:19:44,119 --> 00:19:48,000 Speaker 2: oil monument in the region, places like Saudi Arabia, Ata 342 00:19:48,200 --> 00:19:50,560 Speaker 2: and the UE, and they're very active in their investments. 343 00:19:51,240 --> 00:19:54,600 Speaker 2: You might group all of them as doing the same thing, 344 00:19:54,960 --> 00:19:57,320 Speaker 2: but I think there is sort of a there are. 345 00:19:57,359 --> 00:20:00,159 Speaker 2: There are differences in their visions for different things on 346 00:20:00,200 --> 00:20:02,880 Speaker 2: political issues and economic issues, on market issues, and one 347 00:20:02,880 --> 00:20:07,200 Speaker 2: of the very obvious one is energy transition and what 348 00:20:07,240 --> 00:20:09,679 Speaker 2: that does to oil. You know, this is all coming 349 00:20:09,760 --> 00:20:13,199 Speaker 2: down to the fact that these countries export the GCC. 350 00:20:13,359 --> 00:20:15,439 Speaker 2: By that I mean export a lot of oil and 351 00:20:15,480 --> 00:20:17,280 Speaker 2: that gives them a lot of wealth and a lot 352 00:20:17,320 --> 00:20:20,920 Speaker 2: of firepower. But there's different visions on how to deal 353 00:20:20,960 --> 00:20:24,600 Speaker 2: with that and how to manage this in the context 354 00:20:24,600 --> 00:20:26,879 Speaker 2: that the world is going to transition away from fossil 355 00:20:26,880 --> 00:20:29,800 Speaker 2: fuel towards cleaner energy. And I think the two pillars 356 00:20:29,800 --> 00:20:32,679 Speaker 2: of these different visions are basically have Saudi Arabia on 357 00:20:32,680 --> 00:20:35,359 Speaker 2: one side and the UAE on the other. The UAE 358 00:20:35,960 --> 00:20:39,480 Speaker 2: is basically pushing for it, actually it is expanding it's 359 00:20:39,520 --> 00:20:43,320 Speaker 2: all production capacity. It is pushing for it's OPEC quota 360 00:20:43,720 --> 00:20:47,959 Speaker 2: to increase, and it wants to produce more today so 361 00:20:48,000 --> 00:20:50,440 Speaker 2: that it doesn't end up with the stranded assets when 362 00:20:50,560 --> 00:20:54,119 Speaker 2: all prices drop in the future. Saudi Arabia is the 363 00:20:54,240 --> 00:20:57,879 Speaker 2: other sort of end of the spectrum where it has 364 00:20:58,160 --> 00:21:01,000 Speaker 2: large funding needs which requires it have a high oil 365 00:21:01,119 --> 00:21:04,840 Speaker 2: price and as a result there it's strategy towards the 366 00:21:04,840 --> 00:21:07,280 Speaker 2: oil markets is to restrict supply now, not to increase. 367 00:21:07,320 --> 00:21:10,320 Speaker 2: Supply restricted in order to get that high price and 368 00:21:10,840 --> 00:21:15,400 Speaker 2: allows it to funds domestic investments. And these disputes at times, 369 00:21:15,520 --> 00:21:18,200 Speaker 2: you know, sometimes they surface and a oppect meetings, and 370 00:21:18,280 --> 00:21:21,040 Speaker 2: they did a couple of years ago, but sometimes they 371 00:21:21,160 --> 00:21:23,119 Speaker 2: just you know, they're they're they're they're in the background 372 00:21:23,160 --> 00:21:25,760 Speaker 2: when when the OPEC discussions happen. So maybe it's not 373 00:21:26,359 --> 00:21:28,399 Speaker 2: I digress quite a bit, but maybe it's not related 374 00:21:28,440 --> 00:21:30,480 Speaker 2: to the to the clean energy. But I think the 375 00:21:30,560 --> 00:21:33,800 Speaker 2: deal speaks to the fact that there's also competition between 376 00:21:33,800 --> 00:21:36,159 Speaker 2: these oil monument and ages. Is one area where they 377 00:21:36,160 --> 00:21:38,080 Speaker 2: compete over Now. 378 00:21:38,160 --> 00:21:41,840 Speaker 3: I mentioned in the beginning or early on that there 379 00:21:41,920 --> 00:21:44,440 Speaker 3: just seems to be an endless stream of stories about 380 00:21:44,480 --> 00:21:49,280 Speaker 3: the development of big new real estate project megacities, and 381 00:21:49,600 --> 00:21:53,080 Speaker 3: there are all these visions, particularly Saudi obviously, and like 382 00:21:53,119 --> 00:21:55,000 Speaker 3: there will be these videos that I see on Twitter, 383 00:21:55,240 --> 00:21:57,960 Speaker 3: like here's how they're one hundred kilometer city is going, 384 00:21:58,040 --> 00:22:00,159 Speaker 3: and here's how they're city that's going to be have 385 00:22:00,200 --> 00:22:03,200 Speaker 3: a mayor that's an AI bought or something like that. 386 00:22:03,240 --> 00:22:05,800 Speaker 3: Like it's always like this sort of wild stuff. But like, 387 00:22:06,440 --> 00:22:10,240 Speaker 3: what is the track record here setting aside whether the 388 00:22:10,359 --> 00:22:12,959 Speaker 3: UAE is going to fully get the sort of economic 389 00:22:13,080 --> 00:22:16,840 Speaker 3: returns that maybe would justify a thirty five billion dollar deal, 390 00:22:17,480 --> 00:22:20,560 Speaker 3: is there reason to think that there's a good chance 391 00:22:20,600 --> 00:22:24,080 Speaker 3: of turning this part of Egypt into sort of a 392 00:22:24,600 --> 00:22:27,680 Speaker 3: booming industrial and tourist area. 393 00:22:29,119 --> 00:22:32,200 Speaker 2: The short answer to this is that the regional track 394 00:22:32,240 --> 00:22:37,359 Speaker 2: recit of developing and making profitable new cities megacities is 395 00:22:37,400 --> 00:22:41,080 Speaker 2: not great if you look at itself. I've just mentioned 396 00:22:41,119 --> 00:22:44,040 Speaker 2: the reason why it got into this most recent crisis. 397 00:22:44,080 --> 00:22:47,359 Speaker 2: It built a new it has built a new administrative capital, 398 00:22:47,920 --> 00:22:52,320 Speaker 2: which has limited economic critics. Actually, in the late nineteen nineties, 399 00:22:52,400 --> 00:22:56,320 Speaker 2: eighty two thousands, Egypt tract to build another city which 400 00:22:56,440 --> 00:23:00,840 Speaker 2: was in southwest of the country, away from then All Valley, 401 00:23:01,240 --> 00:23:04,200 Speaker 2: and the president was at the time was fully invested 402 00:23:04,240 --> 00:23:06,680 Speaker 2: in that. They were hoping that millions of people would 403 00:23:06,680 --> 00:23:11,000 Speaker 2: live there. Today, very few people reside there. Saudi Arabia 404 00:23:11,000 --> 00:23:15,040 Speaker 2: obviously is building a mega city in Neon Way to 405 00:23:15,080 --> 00:23:17,359 Speaker 2: see if that's going to succeed or not. But Saudi 406 00:23:17,400 --> 00:23:22,119 Speaker 2: itself had a number of cities and developments. There were 407 00:23:22,160 --> 00:23:25,119 Speaker 2: mega developments that didn't work out, there were King Abdal 408 00:23:25,200 --> 00:23:28,000 Speaker 2: economic cities, and there's a bunch of other stuff. So 409 00:23:28,000 --> 00:23:30,160 Speaker 2: the track lockt in the region of building these cities 410 00:23:30,480 --> 00:23:33,440 Speaker 2: away from where you have the cluster of the population 411 00:23:34,080 --> 00:23:37,199 Speaker 2: hasn't been great, and that doesn't bode well for this 412 00:23:37,240 --> 00:23:37,920 Speaker 2: new investment. 413 00:23:38,600 --> 00:23:42,840 Speaker 1: So Joe mentioned in our intro that there could be 414 00:23:43,080 --> 00:23:46,879 Speaker 1: a sense that Egypt is kind of selling part of 415 00:23:46,920 --> 00:23:51,960 Speaker 1: itself to the UAE. What's been the domestic reception within 416 00:23:52,080 --> 00:23:56,400 Speaker 1: Egypt around this steal? So obviously it seems to have 417 00:23:57,440 --> 00:24:01,600 Speaker 1: led to something of a recovery in financial markets, but 418 00:24:01,760 --> 00:24:04,160 Speaker 1: people on the ground, how do they feel about it? 419 00:24:04,960 --> 00:24:08,200 Speaker 2: Not great? I think if you think about it, inflation 420 00:24:08,280 --> 00:24:11,040 Speaker 2: in Egypt is above thirty percent, and that is before 421 00:24:11,800 --> 00:24:15,720 Speaker 2: the recent floatation of the pound, which moved by forty 422 00:24:15,760 --> 00:24:18,520 Speaker 2: percent weekend, by forty percent. So even before that weakening, 423 00:24:18,880 --> 00:24:22,200 Speaker 2: inflation was very high. And that's the second, you know, 424 00:24:22,240 --> 00:24:25,040 Speaker 2: if you think about the currency itself, and the last 425 00:24:25,480 --> 00:24:30,520 Speaker 2: since presidencies it came to power in mid twenty thirteen, 426 00:24:30,560 --> 00:24:33,560 Speaker 2: the currency has lost about eighty six percent of its 427 00:24:33,600 --> 00:24:37,200 Speaker 2: value against the dollar. So that obviously eats up into 428 00:24:37,560 --> 00:24:42,200 Speaker 2: people's real incomes, that increases living costs. And I think 429 00:24:42,280 --> 00:24:45,639 Speaker 2: while there was a lot of sort of understanding that 430 00:24:45,760 --> 00:24:50,119 Speaker 2: twenty sixteen was an accumulating the devaluation, the fifty percent 431 00:24:50,160 --> 00:24:53,679 Speaker 2: devaluation that happened in twenty sixteen was a result of 432 00:24:53,800 --> 00:24:56,680 Speaker 2: previous policy mistakes that had to be corrected. At one 433 00:24:56,720 --> 00:24:59,760 Speaker 2: point in time. I think there is a realization now 434 00:25:00,080 --> 00:25:04,359 Speaker 2: that what is happening now is partly, maybe mostly, a 435 00:25:04,440 --> 00:25:07,520 Speaker 2: result of policy mistakes. There is an arctive that is 436 00:25:07,560 --> 00:25:12,280 Speaker 2: a series of unfortunate shocks that happened globally that affected 437 00:25:12,320 --> 00:25:14,560 Speaker 2: the whole global economy, and Egypt is one of it. 438 00:25:15,200 --> 00:25:17,800 Speaker 2: But I think the true narrative is that there was 439 00:25:17,920 --> 00:25:20,960 Speaker 2: a series of policy mistakes which were exposed by these 440 00:25:21,000 --> 00:25:22,040 Speaker 2: global shocks. 441 00:25:23,000 --> 00:25:27,200 Speaker 3: You know, if you're getting an IMF deal, then obviously 442 00:25:27,320 --> 00:25:30,480 Speaker 3: the country is expected to make all of these reforms 443 00:25:30,760 --> 00:25:34,520 Speaker 3: and privatizations and ending fuel subsidies and all the things 444 00:25:34,520 --> 00:25:37,240 Speaker 3: that we sort of associate you know, reducing the size 445 00:25:37,280 --> 00:25:41,000 Speaker 3: of government, all these things that we associate with IMF conditionality. 446 00:25:41,600 --> 00:25:45,679 Speaker 3: A thirty five billion dollar injection for a piece of 447 00:25:45,760 --> 00:25:48,760 Speaker 3: land is very nice, Like, is there any sense that 448 00:25:49,040 --> 00:25:53,160 Speaker 3: beyond the sort of capital injection that Egypt is going 449 00:25:53,200 --> 00:25:56,359 Speaker 3: to make any changes to sort of its fundamental economic 450 00:25:56,440 --> 00:26:01,640 Speaker 3: structure to improve the I don't know, sustainability, or competitiveness 451 00:26:01,760 --> 00:26:04,960 Speaker 3: or just the health perhaps of its economy outside of 452 00:26:05,000 --> 00:26:05,960 Speaker 3: the new cash injection. 453 00:26:07,080 --> 00:26:10,080 Speaker 2: Right, So, I think this is where the IMF deal 454 00:26:10,160 --> 00:26:13,840 Speaker 2: comes in, and it's conditionality. So I think if the 455 00:26:13,880 --> 00:26:18,240 Speaker 2: country is to learn from its latest crisis, there are 456 00:26:18,280 --> 00:26:19,800 Speaker 2: a few things that they need to do. They need 457 00:26:19,800 --> 00:26:23,560 Speaker 2: to float the currency, and the IMF seems intent on 458 00:26:23,640 --> 00:26:27,360 Speaker 2: that happening. Egypt has a credibility sort of gap there 459 00:26:27,440 --> 00:26:30,320 Speaker 2: because in twenty sixteen they said they were floating the currency. 460 00:26:30,359 --> 00:26:33,640 Speaker 2: They didn't. They just repegged in twenty twenty two because 461 00:26:33,640 --> 00:26:35,520 Speaker 2: they said there was floating in twenty sixteen and twenty 462 00:26:35,560 --> 00:26:37,360 Speaker 2: twenty two they said it's going to be a durably 463 00:26:37,400 --> 00:26:39,600 Speaker 2: flexible exchange, right, they had to add the world the 464 00:26:39,640 --> 00:26:43,520 Speaker 2: word durably, and again they didn't. And now they said 465 00:26:43,560 --> 00:26:47,080 Speaker 2: they're going to let market forces determine basically the currency. 466 00:26:47,680 --> 00:26:50,240 Speaker 2: And since the currency moved on the sixth of March, 467 00:26:50,320 --> 00:26:54,000 Speaker 2: it's been mostly it's basically there's very little volatility. That 468 00:26:54,080 --> 00:26:57,480 Speaker 2: telling us probably market forces are not that smooth. So 469 00:26:57,560 --> 00:26:58,840 Speaker 2: the first thing is they need to do is as 470 00:26:58,840 --> 00:27:00,359 Speaker 2: a floating of the exchange rate in I think the 471 00:27:00,400 --> 00:27:03,159 Speaker 2: IMF is pushing for this. The second thing is the 472 00:27:03,320 --> 00:27:07,600 Speaker 2: reliance on hot money, and yes, as global interest rates 473 00:27:07,600 --> 00:27:11,920 Speaker 2: are about to fall, egyptis devaried the currency significantly is 474 00:27:12,000 --> 00:27:16,320 Speaker 2: hiking interest rates. It might become again an attractive place 475 00:27:16,440 --> 00:27:20,359 Speaker 2: for carric traders and hot money. But again the lesson is, 476 00:27:20,520 --> 00:27:23,639 Speaker 2: don't just rely on this because this is unstable and 477 00:27:23,800 --> 00:27:27,680 Speaker 2: they can escape in the space of weeks, as had 478 00:27:27,760 --> 00:27:30,240 Speaker 2: happened recently. But I think there's I think beyond that 479 00:27:30,400 --> 00:27:33,840 Speaker 2: this sounds all like Washington consensus stuff. I think the 480 00:27:33,920 --> 00:27:35,960 Speaker 2: biggest lesson that we've learned from this and I think 481 00:27:36,119 --> 00:27:38,320 Speaker 2: just it just it's not just for Egypt, for the 482 00:27:38,320 --> 00:27:40,800 Speaker 2: whole region. It's the whole region is trying to find 483 00:27:40,920 --> 00:27:46,280 Speaker 2: sort of technical economic solutions two big questions, and you 484 00:27:46,400 --> 00:27:49,640 Speaker 2: realize that the technical economics can get you only so far, 485 00:27:49,680 --> 00:27:52,560 Speaker 2: and there are political decisions to be made. The biggest 486 00:27:52,560 --> 00:27:55,800 Speaker 2: issue that Egypt can't get money, which is not hot money, 487 00:27:55,920 --> 00:27:59,199 Speaker 2: can't get direct investments into the country, not from some 488 00:27:59,280 --> 00:28:01,600 Speaker 2: one of the fun from several wealth funds, but from 489 00:28:01,640 --> 00:28:04,600 Speaker 2: other players. Is that the army plays a dominant role 490 00:28:04,960 --> 00:28:07,280 Speaker 2: in the economy and it's very difficult to compete with 491 00:28:07,359 --> 00:28:10,679 Speaker 2: the army, and you know, the IMF, it's very difficult 492 00:28:10,680 --> 00:28:13,800 Speaker 2: to the IMF to change that. The reason why Egypt 493 00:28:14,000 --> 00:28:17,840 Speaker 2: runs a persistent trade deficit, yes, because it keeps free 494 00:28:17,840 --> 00:28:21,960 Speaker 2: fixing the currency and includes competitiveness. Competitiveness, but also I 495 00:28:21,960 --> 00:28:25,879 Speaker 2: think the internal dynamics within the Egyptian market lacks competitiveness 496 00:28:25,880 --> 00:28:29,040 Speaker 2: because you have this big player at the army which 497 00:28:29,320 --> 00:28:32,280 Speaker 2: doesn't need to be efficient to export abroad because it 498 00:28:32,320 --> 00:28:35,520 Speaker 2: captures the domestic market. So I think the big either 499 00:28:35,520 --> 00:28:38,920 Speaker 2: there are technical lessons, economic lessons that Egypt should implement 500 00:28:38,920 --> 00:28:41,320 Speaker 2: and hopefully will implement this term around, and they have 501 00:28:41,480 --> 00:28:44,280 Speaker 2: learned from past mistakes. But I also I think that 502 00:28:44,400 --> 00:28:47,680 Speaker 2: is which the IMF actually can intervene and make conditions on. 503 00:28:48,120 --> 00:28:50,320 Speaker 2: But there's a political dimension to this which is very 504 00:28:50,360 --> 00:28:53,800 Speaker 2: difficult for the IMF to go in and decide how, 505 00:28:53,880 --> 00:29:10,120 Speaker 2: you know, who plays what role within the economy. 506 00:29:12,920 --> 00:29:15,320 Speaker 1: Zooming out a little bit and going back to the 507 00:29:15,880 --> 00:29:19,800 Speaker 1: oil theme, you know, we used to see a lot 508 00:29:19,880 --> 00:29:24,000 Speaker 1: of the excess money from places like the UAE and 509 00:29:24,160 --> 00:29:28,120 Speaker 1: Saudi Arabia from their oil production end up in Western 510 00:29:28,200 --> 00:29:31,000 Speaker 1: financial assets, so you know, they would buy a bunch 511 00:29:31,040 --> 00:29:35,040 Speaker 1: of treasuries, or they would buy they would make investments 512 00:29:35,080 --> 00:29:40,000 Speaker 1: in tech companies and things like that. Does it feel 513 00:29:40,040 --> 00:29:42,239 Speaker 1: to you like we're seeing a little bit of a 514 00:29:42,280 --> 00:29:46,760 Speaker 1: shift where maybe more of those petro dollars are ending 515 00:29:46,880 --> 00:29:51,560 Speaker 1: up in these kinds of regional projects or other strategic 516 00:29:51,800 --> 00:29:54,200 Speaker 1: long term investments around the region. 517 00:29:55,520 --> 00:29:59,320 Speaker 2: Yes, absolutely so, we've actually we've looked at this and 518 00:30:00,160 --> 00:30:02,360 Speaker 2: written a few pieces on this actually on the terminal. 519 00:30:02,720 --> 00:30:04,760 Speaker 2: So what do you see in terms of the petro 520 00:30:04,840 --> 00:30:08,360 Speaker 2: dollars sort of investments from the soil wealth funds and 521 00:30:08,960 --> 00:30:13,440 Speaker 2: the countries more broadly? You're seeing two changes. One change 522 00:30:13,520 --> 00:30:17,880 Speaker 2: is that countries in the GCC, like the Arabia cut out, 523 00:30:17,960 --> 00:30:22,520 Speaker 2: like the UAE are investing more domestically, building new cities, 524 00:30:22,640 --> 00:30:27,680 Speaker 2: building new infrastructure, hosting the World Cup, hosting the Asian 525 00:30:27,760 --> 00:30:30,800 Speaker 2: Games and so on. And if you invest more domestically, 526 00:30:30,840 --> 00:30:33,360 Speaker 2: that means your imports are higher, and that means you 527 00:30:33,400 --> 00:30:37,880 Speaker 2: have a smaller sort of trade surplus to invest externally 528 00:30:38,600 --> 00:30:40,720 Speaker 2: to begin with, so you have more domestic investments. And 529 00:30:40,720 --> 00:30:44,360 Speaker 2: then once you have that smaller pool from your trade surplus, 530 00:30:44,480 --> 00:30:46,640 Speaker 2: how is it invested? And there's a clear shift if 531 00:30:46,640 --> 00:30:50,400 Speaker 2: you look at how they allocate between risky assets like 532 00:30:50,600 --> 00:30:53,480 Speaker 2: stocks like real estate in neighboring countries or even abroad, 533 00:30:54,040 --> 00:30:57,200 Speaker 2: versus what they traditionally did, which is basically part the 534 00:30:57,280 --> 00:31:00,400 Speaker 2: money in central bank reserves that ends up in US 535 00:31:00,480 --> 00:31:04,760 Speaker 2: treasuries or even just cash or safe deposits. This has 536 00:31:04,800 --> 00:31:07,080 Speaker 2: actually been a shift. It's a visible shift that the 537 00:31:07,160 --> 00:31:11,720 Speaker 2: GCC is allocating more of their wealth towards riskier assets 538 00:31:12,080 --> 00:31:16,120 Speaker 2: like stocks like real estate lack direct investment, and away 539 00:31:16,560 --> 00:31:20,920 Speaker 2: from you know, US treasuries and simple deposits and cash. 540 00:31:21,400 --> 00:31:23,160 Speaker 2: And that shift is very visible and you could just 541 00:31:23,200 --> 00:31:24,120 Speaker 2: see it in the data. 542 00:31:24,920 --> 00:31:28,000 Speaker 3: I'm going to go back on Egypt, just sort of 543 00:31:28,440 --> 00:31:31,160 Speaker 3: focus on something you said about the Egyptian economy. So 544 00:31:31,200 --> 00:31:33,840 Speaker 3: this idea that the army is a big player in 545 00:31:33,880 --> 00:31:38,000 Speaker 3: the domestic economy, A like, what does that mean specifically? 546 00:31:38,080 --> 00:31:40,160 Speaker 3: Is it just that mean that that is the big 547 00:31:40,160 --> 00:31:44,239 Speaker 3: employer and that's sort of how stability is maintained, And 548 00:31:44,280 --> 00:31:47,120 Speaker 3: then be like okay, clean slate, Let's say that weren't 549 00:31:47,120 --> 00:31:51,440 Speaker 3: the case. What ideas do people have for where Egypt 550 00:31:51,520 --> 00:31:54,880 Speaker 3: could theoretically grow it's economy. We seem to be in 551 00:31:54,920 --> 00:31:57,520 Speaker 3: this age of everyone thinking about like, you know, rising 552 00:31:57,600 --> 00:32:01,760 Speaker 3: up the you know, the manufacturing value chain and capturing 553 00:32:01,840 --> 00:32:05,480 Speaker 3: a greater share of that, or or exploiting some sort 554 00:32:05,480 --> 00:32:07,560 Speaker 3: of domestic resources and trades that you talked about. But 555 00:32:07,840 --> 00:32:10,720 Speaker 3: what does that mean? This army dominance of the economy 556 00:32:10,760 --> 00:32:13,280 Speaker 3: and like what other alternative models could there be? 557 00:32:14,640 --> 00:32:17,640 Speaker 2: Right, So, in terms of the army dominance, basically what 558 00:32:17,680 --> 00:32:20,959 Speaker 2: that means is that the army has companies and different 559 00:32:20,960 --> 00:32:27,120 Speaker 2: sactics in hospitality, in construction and food supply chains and 560 00:32:27,200 --> 00:32:31,360 Speaker 2: all sorts of things. And traditionally some of these companies 561 00:32:31,360 --> 00:32:35,360 Speaker 2: have existed for decades, but the role has definitely increased 562 00:32:35,600 --> 00:32:38,240 Speaker 2: in recent years. Certainly in the second half of the 563 00:32:38,240 --> 00:32:42,320 Speaker 2: two Andy tens, the number of Army link companies that 564 00:32:42,360 --> 00:32:45,960 Speaker 2: have been formed has increased. And what that does is, 565 00:32:46,400 --> 00:32:48,760 Speaker 2: as I said, if you're a foreign investor, you wouldn't go. 566 00:32:48,800 --> 00:32:51,360 Speaker 2: And the army has an advantage in terms of getting land, 567 00:32:51,840 --> 00:32:54,960 Speaker 2: it gets cheap labor, it's very it has the regulation, 568 00:32:55,000 --> 00:32:58,600 Speaker 2: it's very difficult to compete with that, and that handers 569 00:32:59,040 --> 00:33:02,000 Speaker 2: each of growth and development because if you I think 570 00:33:02,040 --> 00:33:04,840 Speaker 2: the model for growth and development remains that, you know, 571 00:33:05,320 --> 00:33:09,360 Speaker 2: you're a country, try and basically export more and that 572 00:33:09,400 --> 00:33:12,240 Speaker 2: generates more wealth and that generates more domestic demand. And 573 00:33:12,840 --> 00:33:14,680 Speaker 2: you do this and if that's the case, and you 574 00:33:14,760 --> 00:33:19,240 Speaker 2: have an entity that is very big that is essentially 575 00:33:19,280 --> 00:33:22,360 Speaker 2: apps as a local monopoly, it has limited interest in 576 00:33:22,400 --> 00:33:25,080 Speaker 2: trying to expand abroad, and therefore it ends up being 577 00:33:25,120 --> 00:33:28,440 Speaker 2: inefficient and therefore ends up being you know, unable to 578 00:33:28,640 --> 00:33:32,720 Speaker 2: increase exports. And this is where probably it's worth thinking 579 00:33:32,760 --> 00:33:36,680 Speaker 2: about this and why Egypt keeps getting into a currency 580 00:33:36,680 --> 00:33:39,640 Speaker 2: crisis almost once a decade. So there was a currency 581 00:33:39,640 --> 00:33:42,000 Speaker 2: crissis in Egypt two thousand and three, I mentioned the 582 00:33:42,040 --> 00:33:46,000 Speaker 2: twenty sixteen one and the recent one twenty twenty three. 583 00:33:46,240 --> 00:33:49,800 Speaker 2: I think the main reason is that you always had 584 00:33:50,440 --> 00:33:54,840 Speaker 2: basically politically connected entities that acted as local monopolies that 585 00:33:54,920 --> 00:33:58,960 Speaker 2: captured the domestic market and didn't increase exports. In the 586 00:33:59,120 --> 00:34:03,080 Speaker 2: two thousands before the twenty eleven protests that Tracy mentioned 587 00:34:03,640 --> 00:34:07,800 Speaker 2: used to be businessmen that linked to the then president 588 00:34:07,880 --> 00:34:13,000 Speaker 2: Mobarak's son, Gaman Mobarak. These guys had, you know, monopolized 589 00:34:13,000 --> 00:34:16,719 Speaker 2: the steel industry, the cement, tourism and so on, and 590 00:34:16,760 --> 00:34:20,440 Speaker 2: again there was very limited interests in expanding abroad. After 591 00:34:20,480 --> 00:34:24,600 Speaker 2: twenty thirteen, the army became more prominent. And that makes 592 00:34:24,600 --> 00:34:26,359 Speaker 2: you think that if you're replaced now the army, if 593 00:34:26,360 --> 00:34:29,319 Speaker 2: the army starts selling sales, selling shares and stakes in 594 00:34:29,320 --> 00:34:33,560 Speaker 2: his companies, just GCC, several wealth funds actually doesn't change 595 00:34:33,600 --> 00:34:37,319 Speaker 2: the competitive dynamic of the Egyptian economy. All you're doing 596 00:34:37,400 --> 00:34:41,040 Speaker 2: is replacing one local monopoly that is the army, with another. 597 00:34:41,560 --> 00:34:45,200 Speaker 2: There are the GCC Social Wealth funds. So again this 598 00:34:45,960 --> 00:34:49,640 Speaker 2: goes back to the political economy side of it and 599 00:34:49,800 --> 00:34:51,359 Speaker 2: how each we could get out of it. 600 00:34:52,000 --> 00:34:55,040 Speaker 1: So putting it all together, as you explained, there have 601 00:34:55,200 --> 00:34:58,480 Speaker 1: been these sorts of false starts when it comes to 602 00:34:58,520 --> 00:35:05,200 Speaker 1: the Egyptian economy and reform before. Is there something here 603 00:35:05,360 --> 00:35:08,480 Speaker 1: that makes you think it might be different this time? 604 00:35:08,600 --> 00:35:13,640 Speaker 1: Like how optimistic should people be about this particular you know, 605 00:35:13,760 --> 00:35:18,320 Speaker 1: thirty five billion dollars and the ensuing increase in IMF 606 00:35:18,400 --> 00:35:20,680 Speaker 1: financing and things like that. How much of a difference 607 00:35:20,760 --> 00:35:23,000 Speaker 1: is it going to make? Is Egypt going to follow 608 00:35:23,080 --> 00:35:23,960 Speaker 1: through on this one? 609 00:35:24,960 --> 00:35:26,960 Speaker 2: I think that's a short term and there's a long term. 610 00:35:27,080 --> 00:35:29,560 Speaker 2: In the short term, Egypt's getting thirty five billion dollars 611 00:35:29,560 --> 00:35:32,719 Speaker 2: from the UAE, is getting eight billion dollars from the IMF, 612 00:35:32,920 --> 00:35:35,719 Speaker 2: from other entities getting twelve billion dollars. The total is 613 00:35:35,760 --> 00:35:38,280 Speaker 2: we're talking about fifty five billion dollars arriving in Egypt 614 00:35:38,600 --> 00:35:41,560 Speaker 2: over the next few years, and that is enough to 615 00:35:41,920 --> 00:35:44,360 Speaker 2: is the dollar shortages in the country in the short 616 00:35:44,520 --> 00:35:47,920 Speaker 2: In the short term, I think in the long term, 617 00:35:48,200 --> 00:35:50,879 Speaker 2: the stuff I've mentioned about changing the role of the army, 618 00:35:50,920 --> 00:35:56,440 Speaker 2: about floating the exchange rate, about the reliance on hot money, 619 00:35:57,000 --> 00:35:59,600 Speaker 2: these things need to change. And unless we see a 620 00:35:59,680 --> 00:36:03,839 Speaker 2: change in there, I don't know, maybe Egypt will enter 621 00:36:03,920 --> 00:36:07,479 Speaker 2: in another currency crisis. Further down the road. I think 622 00:36:07,560 --> 00:36:10,040 Speaker 2: if it takes zoom out a little bit, and if 623 00:36:10,040 --> 00:36:11,680 Speaker 2: you think about the region as a whole, I think 624 00:36:11,680 --> 00:36:14,000 Speaker 2: that is the summary of the critical economy in the 625 00:36:14,040 --> 00:36:18,319 Speaker 2: region is that you have every country relies on what 626 00:36:18,360 --> 00:36:21,719 Speaker 2: economists call rents, right, which is basically rent is an 627 00:36:21,760 --> 00:36:24,600 Speaker 2: income that you get without working. And you know, if 628 00:36:24,640 --> 00:36:27,560 Speaker 2: you think about the Gulf and Iraq, they rely on oil. 629 00:36:27,760 --> 00:36:31,239 Speaker 2: If you think about Egypt, it relies on the Sewers Channel. 630 00:36:31,280 --> 00:36:34,400 Speaker 2: If you think about a place like Jordan, it relies 631 00:36:34,520 --> 00:36:38,160 Speaker 2: on aid from abroad. And everyone's trying to transition out 632 00:36:38,239 --> 00:36:40,360 Speaker 2: of that. But it's very difficult to transition out of 633 00:36:40,440 --> 00:36:44,600 Speaker 2: that because that kind of rent basically creates not just 634 00:36:44,680 --> 00:36:47,480 Speaker 2: an economic structure, but also a political and social structure. 635 00:36:47,719 --> 00:36:51,280 Speaker 2: And trying to address that with technical economics without addressing 636 00:36:51,320 --> 00:36:54,640 Speaker 2: the political side of it is bound to end in. 637 00:36:54,680 --> 00:36:59,120 Speaker 1: Failure, all right, Zia dud Are, Chief Emerging Markets economist 638 00:36:59,160 --> 00:37:03,120 Speaker 1: over at Bloomberg Economics. The big take is out right now. 639 00:37:03,160 --> 00:37:06,080 Speaker 1: You can find it on Bloomberg dot com and on 640 00:37:06,200 --> 00:37:08,439 Speaker 1: the terminal of course. Thank you so much for coming 641 00:37:08,440 --> 00:37:09,080 Speaker 1: on all thoughts. 642 00:37:09,320 --> 00:37:09,759 Speaker 2: Thank you. 643 00:37:10,080 --> 00:37:12,480 Speaker 3: Yeah, that was great. That was so good, so good, 644 00:37:12,560 --> 00:37:13,319 Speaker 3: Thank you so much. 645 00:37:26,360 --> 00:37:26,640 Speaker 1: Joe. 646 00:37:26,920 --> 00:37:27,880 Speaker 3: That was so clear. 647 00:37:28,080 --> 00:37:30,400 Speaker 1: That was such a clear explanation, and I think, like 648 00:37:30,440 --> 00:37:33,319 Speaker 1: I have to emphasize here how complicated the sort of 649 00:37:33,360 --> 00:37:36,879 Speaker 1: political backdrop often is when it comes to these sort 650 00:37:36,920 --> 00:37:40,160 Speaker 1: of developments in the Middle East. And Ziad did such 651 00:37:40,160 --> 00:37:41,600 Speaker 1: a good job of explaining all. 652 00:37:41,560 --> 00:37:45,200 Speaker 3: Of them totally. That was so good and so interesting, 653 00:37:45,440 --> 00:37:47,680 Speaker 3: you know, starting for there were a few things that 654 00:37:47,880 --> 00:37:50,520 Speaker 3: really stood out, but that I had not realized that 655 00:37:50,640 --> 00:37:55,440 Speaker 3: at all, about the army's dominance of the domestic economy 656 00:37:55,480 --> 00:37:59,279 Speaker 3: and the various local monopolies and retail locations and real 657 00:37:59,360 --> 00:38:02,759 Speaker 3: estate project etcetera that are army backed. And when you 658 00:38:02,800 --> 00:38:07,040 Speaker 3: think about, like, well, what is a challenging domestic reform thing. 659 00:38:07,160 --> 00:38:10,400 Speaker 3: I mean, every country in the world has issues with 660 00:38:10,560 --> 00:38:14,440 Speaker 3: like the challenge of military reform and military spending and 661 00:38:14,440 --> 00:38:16,319 Speaker 3: stuff like that. And so when you think, well, how 662 00:38:16,320 --> 00:38:18,360 Speaker 3: do you like, you know what what like I can't 663 00:38:18,360 --> 00:38:22,400 Speaker 3: that must be an unimaginable challenge if like that really 664 00:38:22,440 --> 00:38:24,000 Speaker 3: needs to be reformed in some way. 665 00:38:24,160 --> 00:38:24,359 Speaker 2: Well. 666 00:38:24,400 --> 00:38:27,880 Speaker 1: I also liked his characterization of a lot of the 667 00:38:27,920 --> 00:38:31,959 Speaker 1: countries in the region as sort of rent seeking economies, 668 00:38:32,120 --> 00:38:36,120 Speaker 1: where the primary mode of making money is either extracting 669 00:38:36,120 --> 00:38:39,760 Speaker 1: stuff from the ground or charging people to travel down 670 00:38:39,920 --> 00:38:43,719 Speaker 1: your canal. That sounds weird, but then the idea that 671 00:38:43,760 --> 00:38:47,120 Speaker 1: the entire region is sort of trying to transition its 672 00:38:47,200 --> 00:38:50,359 Speaker 1: way out of that move to that value add economy, 673 00:38:51,000 --> 00:38:53,720 Speaker 1: that was super clear. The one thing I will also 674 00:38:53,800 --> 00:38:57,399 Speaker 1: say is it's weird that so much of it has 675 00:38:57,560 --> 00:39:02,400 Speaker 1: to be megacities, right, because surely, I mean, there is 676 00:39:03,200 --> 00:39:07,000 Speaker 1: a relativity at play here where if one one country 677 00:39:07,239 --> 00:39:10,680 Speaker 1: is successful at building a mega city, whether it's Saudi 678 00:39:10,680 --> 00:39:15,440 Speaker 1: Arabia or the UAE, there's only so many tourists that 679 00:39:15,520 --> 00:39:18,200 Speaker 1: can go around, right, There's only so many yachts that 680 00:39:18,239 --> 00:39:21,799 Speaker 1: can be positioned in these really fancy cities. So I 681 00:39:21,840 --> 00:39:25,680 Speaker 1: do wonder about that. But that said, I mean people 682 00:39:25,719 --> 00:39:29,959 Speaker 1: said this about Dubai ages ago that eventually Dubai growth 683 00:39:30,000 --> 00:39:32,200 Speaker 1: would sort of peter out, and instead, over the past 684 00:39:32,280 --> 00:39:35,800 Speaker 1: couple of years following Russia's invasion of Ukraine, that economy 685 00:39:35,800 --> 00:39:38,040 Speaker 1: has been absolutely booming. So who knows. 686 00:39:38,440 --> 00:39:41,600 Speaker 3: Yeah, no, that's really interesting on that point about rents. 687 00:39:41,640 --> 00:39:44,560 Speaker 3: And just to sort of further your observation, that stuck 688 00:39:44,560 --> 00:39:46,520 Speaker 3: out at me too. And you see the challenge, like 689 00:39:46,600 --> 00:39:48,839 Speaker 3: everyone wants to diversify and everyone wants to like we're 690 00:39:48,840 --> 00:39:51,000 Speaker 3: gonna be an ai hub and we're going to be 691 00:39:51,120 --> 00:39:55,160 Speaker 3: a clean energy hub or whatever it is, right, Like 692 00:39:55,200 --> 00:39:57,760 Speaker 3: that's the goal because yeah, you make all this money 693 00:39:57,760 --> 00:40:00,920 Speaker 3: from rents you're blessed to have in the ground or 694 00:40:01,000 --> 00:40:03,880 Speaker 3: natural gas resources, but you want to like make something 695 00:40:03,960 --> 00:40:06,000 Speaker 3: that people want or you want to be able to 696 00:40:06,120 --> 00:40:11,279 Speaker 3: climb up the value chain in some way. And I 697 00:40:11,280 --> 00:40:14,080 Speaker 3: don't know our mega cities and real estate, Like, I mean, 698 00:40:14,160 --> 00:40:17,520 Speaker 3: real estate is a valuable thing, but it does seem tricky. 699 00:40:17,760 --> 00:40:20,560 Speaker 1: Yeah, all right, Well, I'm glad we finally. 700 00:40:20,239 --> 00:40:22,400 Speaker 3: Had on Yeah, we got to have them back. That 701 00:40:22,480 --> 00:40:22,880 Speaker 3: was great. 702 00:40:22,920 --> 00:40:24,759 Speaker 1: All right, shall we leave it there, Let's leave it there. 703 00:40:24,880 --> 00:40:27,600 Speaker 1: This has been another episode of the All Thoughts podcast. 704 00:40:27,640 --> 00:40:30,879 Speaker 1: I'm Tracy Alloway. You can follow me at Tracy Alloway and. 705 00:40:30,840 --> 00:40:33,560 Speaker 3: I'm Jill Wisenthal. You can follow me at the Stalwart, 706 00:40:33,800 --> 00:40:37,400 Speaker 3: follow z ed At at zed Sorry, follow zi ed 707 00:40:37,480 --> 00:40:40,480 Speaker 3: at At zed m Daud and of course check out 708 00:40:40,480 --> 00:40:43,360 Speaker 3: his big Take now on Bloomberg dot Com and the Terminal. 709 00:40:43,640 --> 00:40:47,160 Speaker 3: Follow our producers Carmen Rodriguez at Carmen Ermann, dash Ol 710 00:40:47,160 --> 00:40:50,839 Speaker 3: Bennett at Dashbot and kel Brooks at kel Brooks. And 711 00:40:50,880 --> 00:40:53,319 Speaker 3: thank you to our producer Moses on them. Form our 712 00:40:53,320 --> 00:40:56,319 Speaker 3: odd Lats content. 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