March 28, 2006

Ship of fuels

The US fears a P&O terror takeover, but Middle East petrodollars are welcome in Australia. Eric Ellis reports

Only in Washington do politicians blur real life with art.

When cranky US congressmen last week frothed that America’s ports could become the next Ground Zero if Dubai Inc’s $10bn takeover of British stevedore P&O went ahead, some flagged the money scene in George Clooney’s Oscar-winning Syriana as evidence of what could happen. There, a boatload of Islamists ram a supertanker sitting in port.I

If only they’d waited for the credits. The scene was filmed in Dubai, which built the massive “Media City” to become a lower-cost Hollywood backlot just like Prague, Vancouver and Sydney. Never mind that US waters will remain patrolled by US officials and that P&O’s six American ports were already owned by foreigners. Dubai is a phenomenally wealthy and liberal financial centre. But to many Americans, it is al Qaeda Central, and so the US part of the deal was scuppered.

In Australia, a P&O now owned by Dubai’s sheikhs controls proportionately more than it does American. But the real or imagined terror implications haven’t registered. It may be that Syriana opened late at Hoyts, or that politicians didn’t join the dots. Perhaps it’s simply because Australians are just more grown up about Dubai, being used to flying the cheaper Emirates Airlines to Europe.

The fact is that Dubai’s sheikhs do little more than count the returns from their investments in their air-conditioned eyries. Royal family-owned Dubai Ports World may struggle with public relations, but it’s little different to most of the region’s Arab-owned multinationals. The chairman is an Emirati, the executives are hired guns from Britain, Australia and North America, and those doing the real grunt work on the docks are mostly Indian and Sri Lankan guestworkers.

America’s loss could translate to Australia’s gain. Mid-East petrodollars had only just began to filter back to the US after 9/11. Now Congress has sent a message that it’s not welcome, a message Canberra was careful not to send. Even the largest Arab investor in America, Prince Al Waleed bin Talal of Saudi Arabia, who controls huge slabs of Citigroup, Apple, News Corp and Time-Warner, has signalled he will keep more cash in his home region. Despite the AWB scandal, Australia is increasingly seen in the Middle East as less a huge farm and more a large and sophisticated economy that can accommodate petrocash without the hysteria.

As oil prices soared post-2001 and as the US and Europe cooled, the big investment winners have been Gulf states like the UAE and Oman. China isn’t the world’s fastest-growing economy: Qatar’s has doubled since 9/11, delivering 20% growth in each of the last three years.

As the Gulf transforms itself into sterile Singapore-sur-Sand but with whackier architecture, local planners fret about bubbles as petrosheikhs park cash in properties they can sell but not necessarily fill. The freehold property market in Dubai is barely three years old, but prices have trebled.. Malaysia, too, has benefited from Arab money, and the sheikhs’ deal-hunting advisers are filling hotels in India.

A poignant reminder of how much money there is sloshing around the Gulf came during last year’s privatisation of Pakistan’s telecom monopoly. The deal boiled down to three tenderers: Optus’ owner Singapore Telecom, China Mobile, and the Abu Dhabi royal family-owned Etisalat.Some 5000 questions were logged during the due diligence process. Only 20 of then came from Etisalat. The Emiratis then bid 90% more than the second bidder. Maybe that’s why Australia’s politicians haven’t made a fuss.