Speech for The Middle East Association

City of London Luncheon,
The Mansion House
13th September 2007
Jason Peers

Lord Mayor, Sheriff, Director General, Your Highnesses, excellencies,
My Lords, Ladies and Gentlemen

It is with great pleasure that I am able, in my new role as Chairman of the MEA in the Gulf, to speak to such a large, august audience representing, as it does, an important cross-section of the City of London’s financial community and, importantly, many friends and colleagues from the Middle East. Ahlan Wa’Sahlan.

We have heard from the Lord Mayor, Robert and Michael about the huge opportunities and challenges that the Middle East represents for the City today. Having represented City firms in the Middle East for ten years and now, living as I do in the UAE, and operating a young business across the region, I can only endorse this.

We are seeing a period of unprecedented growth and opportunity. Unprecedented not just because of the sheer scale of the accumulation of liquidity through strong commodity prices, but through wealth creation in the broader economies of the region. Strong population growth, among the highest in the world, and a predominantly young population, is providing powerful imperatives to regional governments to address real and deep rooted flaws in education provision, to liberalise economies, to create employment opportunities and to develop the required infrastructure both to address swelling populations, but also to support sustainable economic growth.

Furthermore, this path to economic liberalisation has been driven by a real and palpable desire to accelerate economic diversification, as witnessed by the massive investment into financial services, tourism, real estate and other service sectors such as aviation and transport.

Additionally, dramatic strides have been made in the calibre, vision and confidence of the region’s business leaders over the past few years and this is now manifesting itself in a surge of increasingly self-confident and assertive outward investment.

We have all become used to Gulf investors buying up prime international real estate, leading hotels and office blocks – the acquisition of the Chelsea Barracks by Qatari investors for over £900 million took the breath away.

But who would have believed that household names, major companies all, would be targeted by Gulf investors; Tussauds and P & O were first steps, but the bids for Sainsburys, Thames Water and now even the London Stock Exchange serve to drive home the message that Middle Eastern capital now recognises no limitations.

What is more remarkable is that this unprecedented wave of optimism and activity throughout the area comes at a time when the geo political issues in the region are arguably as bad as they have ever been.

The fact that the region can flourish despite the awful situation in Iraq, the Iranian stand off and the continuing plight of the Lebanese and Palestinians should not diminish the absolute imperative for all parties to focus on satisfactory resolution of these crises, not least for the Palestinian people.

The sub prime credit crisis will undoubtedly have an impact in the region, both as a result of direct exposure and also through knock effects through cost of and appetite for credit. The extent of the impact of this will only become clearer in the next month or so.

Ability to diversify risk of financing hindered. Transactions already being delayed or cancelled.

The City
There was a time when the City was the undisputed financial centre of the Middle East. Political and regulatory issues contrived to drive the life out of centres from Istanbul to Cairo, Casablanca to Dubai.

London was able to bask in relatively uncontested supremacy as the prime supplier of financial services to the region, but volumes were low and the region remained a side-show for most London firms.

Now, Bahrain and Cairo are flourishing again as financial centres, Dubai has firmly established its position as a key regional financial hub and Abu Dhabi, Riyadh and Doha also need to be taken very seriously as centres in their own right.

There is a demonstrable export of human capital occurring from London into these new centres, none more so than Dubai – banks, private equity specialists, lawyers, PR and HR professionals, compliance officers and regulators are flooding to the region, a high proportion from London based firms on internal transfers.

What does this mean for the City? Higher volumes, value and velocity of deals should more than off-set any loss of business in the shorter term, but the City firms will have to work harder and smarter to justify their on-going involvement in regional transactions. Real enthusiasm to establish London’s role at the heart of the Islamic market is key to this.

New challengers are flooding in from Wall Street and increasingly Asia – all flocking to the region to take part in the regional economic boom – and notably to access the strong liquidity. Recent studies found that five national economies in the Middle East hold $1.7 trillion in their central banks, the largest single concentration of assets in the world.

The MEA
The MEA is itself acutely aware of this challenge. Often over the years the MEA has been a lonely voice extolling the virtues of a region historically characterised as small, high risk, labour intensive and generally not worth the effort. The MEA is now successfully re-positioning itself as a key facilitator of trade and investment between the UK and the MENA region and has significantly increased the quality and quantity of its activities to match the opportunities being seen and to ensure the MEA’s enduring relevance in coming years. It recognises that the superior growth witnessed in the region is coupled by economic reforms that will support the sustainability of growth and is positioning itself to act as the critical link between the UK and the region.

Membership is growing and will benefit from the establishment of the MEA’s new Gulf office which we plan to open in Abu Dhabi in the coming months. This is in itself a recognition that to be relevant and successful in the Middle East today, firms need to be there, on the ground, in the market.

I am delighted by the ever-strengthening relationship between the MEA and the City of London. Working together with IFSL and the Corporation of London and with the full support of UK Trade & Investment, the MEA is increasingly relevant as a support, even to the biggest City firms, many of whom represented today have seen these benefits.

The success of the second City and the GCC Conference, combined with the role of City firms in the MEA’s Learning and Leadership Programme for the region, continue to reinforce the potential of this relationship which we will work to ensure flourishes in the coming years with several events of great relevance to the City already planned.

I would like to take this opportunity to thank the Lord Mayor and his team and their predecessors for the unstinting support for the MEA’s activities and for continuing to lead high level visits to a region which always welcomes and values their visits and those of the IFSL teams that support them and for having us here today.

Finally I must thank him for being our guest of honour at this important event today and in such delightful and historic surroundings.

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