Tiny Dubai is having huge global impact :: Daily Telegraph

Ambrose Evans-Pritchard reporting:

Cannily, Dubai has found a niche recycling the oil wealth of its neighbours.

With global oil exports expected to reach $700billion this year, this is a huge sum, and some of it is sticking to them. The Dubai stock market has soared 1,200pc in just two and half years, and is now worth $253billion.

Its booming free-trade zone, entered through a granite Arc de Triomphe, has become the petrodollar entrepot. IPO share issues for the Gulf region have risen 20 times over the last year, expected to reach $15billion by the end of the 2005, according to the law firm Trowers & Hamlins. "This huge amount of cash will add fuel to the current wave of M&A activity. More European and North American companies are going to be targets of takeover bids," it said.
. . .
As far as buying private UK companies, in March Dubai bought Madame Tussaud's waxworks for £800m, which has since taken a majority stake in the London Eye. In just a year, the sheikhdoms have snapped up $1billion of DaimlerChrysler, America's CSX ($1.15billion), Holland's Celtel telecom operations in Africa ($2.8billion), Turk Telecom ($6.5billion), and property in London and New York.

The oil states seem to have learned the lessons of the 1970s when the windfall slipped through their fingers, leaving grand buildings, wide roads, and debt. This time they are saving 60pc, compared to 40pc in the first oil shock. Shunting wealth overseas, they are buying future global growth.

The story was sent to me by John Palmer who read it at the (Canadian) National Post under the title " 'The City' of Islam: With oil reserves quickly dwindling, Dubai has reinvented itself as a 'recycling' business hub for its oil-rich neighbours" (I've not provided a link b/c it's premium content at NP).