On June 10th, 2008, the World Bank Institute Oil, Gas, and Mining Policy Division (COCPO), sponsored a panel discussion entitled The East-East Corridor: The Growing Middle East – Asia Energy Relationship and Capital Flows. Chaired by Paulo de Sa, Sector Manager in the Oil, Gas and Mining Policy Division of the International Finance Corporation (IFC), the event was the second in a series of World Bank sponsored workshops highlighting trade flows and foreign investment within important regions.
Somit Varma, Director in the Oil, Gas and Mining Policy Division of the IFC, commented in his opening remarks that while the relationship between the Middle East and Asia is not new, recent substantial growth within the region is cause for examination and discussion. Dubbed the ‘New Silk Road,’ Varma illustrated how both sides are investing in each other’s industries, fueling each other’s economies, changing the region’s geo-economic landscape and affecting the global economy.
Afshin Molavi, expert and current Fellow and Director of the upcoming Middle East Global Initiative at the New America Foundation, delved into the trade and commercial history between the two regions to better illustrate the current state of their political relationships, financial investments and economic growth. Molavi explained that while it is important to note that markets within the United States, Europe and the West remain the ‘destination of choice’ for the Gulf region, projections predict forecast enormous growth for the New Silk Road. Molavi described more specifically, principle players, including India and China, as well as laggards, like Iran.
Addressing the redefinition of the Pan Asian Grid was Fareed Mohamedi, Partner and Head of the Markets and Country Strategies practice at PFC Energy. Mohamedi discussed the major shift within the geo-political arena of energy and explained that while he felt that many of the conclusions were theoretical, he was confident in the new strategic partnership between East and West Asia. Mohamedi went onto illustrate the current state of energy within the regions and areas of insecurity. Key issues included tensions over the acquisition and allocation of resources, the creation of non-oil economies and political instability.
Commenting from the perspective of finance was Terry Newndorp, Chairman and CEO of Taylor Dejongh. Not only did Newndorp address trends concerning finance, trade movements and investment, but through his experience, he was able to illustrate his points through recent Taylor Dejongh transactions within China and Saudi Arabia. A notable point was how his company had only been presented and processed single region transactions, meaning individual transactions either consisted of all Middle Eastern or all Asian entities. Newndorp also felt that asset management, the lack of expertise among analysts, and complaints from scholars regarding Sharia compliance, were key issues that needed to be addressed in order to support growth within the region.
Finally, Jean-François Seznec, Senior Advisor to PFC and Visiting Associate Professor at Georgetown University’s Center for Contemporary Arab Studies, discussed the situation from a micro-perspective by focusing on Saudi Arabia. First Sezner examined the state and growth of major industries including petroleum, petrochemicals, fertilizers, aluminum and other metals. Next, he examined the local industry structures within the public and private sector of Saudi Arabia. Seznec went onto address the regions industrialization pattern and concluded his presentation with a review on Gulf investments within the far east, specifically Japan and China.