October 2018 :
Construction in the MENA Region
Infrastructure development has been a hot topic in the MENA region over the last few years, particularly in the states of the Gulf Co-operation Council GCC. High ambition and competition for prestige have led to the building of an impressive pipeline of mega-projects, including but not limited to Dubai`s Expo 2020, the 2022 Qatar World Cup and the hugely ambitious Gulf Railway. Governments and private operators in this part of the world are no strangers to undertakings of remarkable scale, but what are the prospects for this new generation of development?
Economic Diversification in the GCC Countries
The success of most of the projects will depend largely on the continued availability of funding. In recent decades, the money for building large-scale public endeavours has been guaranteed by consistently high and rising oil prices. The 70% drop in the price of crude between July 2014 and January 2016 raised serious questions about the sustainability of the levels of government spending seen in the region, though the tentative recovery seen since has eased this pressure slightly. Nevertheless, there is a clear understanding that investment in housing, roads, healthcare, education and amenities is fundamental to the economic diversification that the oil-exporting countries will need in order to safeguard their prosperity in a changing world.
Extraordinary Construction Achievements Throughout MENA
Recent history has shown that individual governments tend to have the spending power and wherewithal to ensure completion of domestic projects, even on vast scales. Qatar`s two international airports in Doha are extraordinary achievements and the UAE's Barakah nuclear power plant is likely to come online at some point in 2017. Despite their high cost and delays, they will be of lasting use and pride to the governments that oversaw their construction.
Lack of Co-operation Across GCC Countries
Where there are still unanswered questions is in the realm of intra-regional cooperation. Budget overruns and delays on wholly domestic projects may be frustrating, but that frustration stays largely within the confines of the state where the project is being built. In the case of the Gulf Railway, which will supposedly connect each of the GCC's six member states to one railway line, difficulties in coordination and cashflow issues relating to the oil price have led to almost total paralysis, with the completion date being provisionally pushed back from 2018 to 2021. At a time when these relatively prosperous states could be forging new and more integrated relationships, they appear to be reverting to their traditional focus on domestic affairs.
Looking Forward to Closer GCC Collaboration
The business community in the region, international operators and tomorrow's tourists all stand to benefit from greater cross-border collaboration within the GCC. There can be no doubt left in anybody's mind that the governments of the gulf are more than capable of creating great things - the next challenge should be for them to start creating great things together. At Cedar Rose, we've been helping people across the MENA cooperate safely and securely for over twenty years. With a little bit of hope and some hard work, together we can make the next twenty years a new era of collaborative and sustainable development for the entire region.
*** The sole purpose of the article above is to generate public discussion, it has no intention to constitute legal advice. ***