THE YEAR: James Bennett takes a look back over the year that was. (Getty Images)

I'm sticking my neck out here but I stand by what I say. The last 12 months have been of more significance to the future of the Gulf region than any other on record. And it's to do with much more than simply a $100 barrel of oil.

When people living in the GCC in 2017 look back a decade it will be remembered for two overarching trends: setting the benchmark for future growth and development and having to react to some very tough questions.

Let me put this into a personal context. For me, 2007 was very different to 2006, both in a positive and negative sense.

My job as a journalist became 100 times more exciting with more money flying around the region, more deals being signed than ever before and more people willing to talk about it. Music to my ears.

Billions more dollars were spent domestically on property and infrastructure investment; an 800km mega metro project in Dubai rose from the desert, talk of huge railway systems at last connecting all four corners of Saudi Arabia became a funding reality; new schools, universities and hospitals were built and planned for a population that will boom in future years; and a quintet of knowledge economic cities, shopping malls, theme parks, reclaimed islands, sports facilities, apartments, villas and low to mid income housing were either all blueprinted for development or are taking shape far quicker than anyone ever imagined.

The amount splashed out on foreign investment also soared with Asian, European and North American governments and companies ironically far more at ease in accepting an inflow of Arab wealth following painful signs of an economic slowdown and sub-prime meltdown in more established markets. The world was no longer scared of Arab investment, and despite the occasional multi-billion dollar banana skin - the Qatar-Sainsbury's supermarket deal - cheque books continued to drawn and signed faster than most Western hotshot gunslingers on key foreign brand minority and majority stakes as well as on a series of strategic takeovers. This included the $11.6bn purchase of General Electric's plastics business by Saudi Basic Industries (Sabic); over $100bn worth of aircraft and engine orders signed off by Middle Eastern carriers at the Dubai Airshow; Abu Dhabi's $7.5bn (4.9%) stake in Citigroup making it the single largest shareholder in the world's largest bank as well as its second US bargain, a $1.35bn, 7.5% stake in Carlyle, one of America's largest private equity groups.

Stakes were taken in iconic brands and businesses in sectors as varied as banking, property, energy, infrastructure, healthcare and manufacturing including the US$965.3m purchase of British luxury carmaker Aston Martin by a consortium headed by Kuwait's Investment Dar; and Borse Dubai's ‘ongoing acquisition' (the US Securities and Exchanges Commission is currently examining the deal with an outcome expected in January) of a 20% stake in US technology exchange Nasdaq.

My personal highlight was a trip to Milan on UAE national airline Etihad's inaugural flight to the Italian city alongside HE Khaldoon Al Mubarak, head of Mubadala, the Abu Dhabi government's investment arm. The 34 year-old leader invited journalists to see the city and the famous Monza Italian Formula One Grand Prix, but that wasn't the best bit. On one early autumn evening Mubadala paid $1m to host an exclusive reception and dinner at Milan's castle in the heart of the city where images of Abu Dhabi's bedouin tribes, ancient heritage and modern landmarks were beamed onto the building's ancient high ramparts and dish dash wearing emiratis mingled with Armani strewn fashionitas. Never before had Italy's glitterati witnessed an Arab country's top representaives within its castle walls, but then again if that country owns 5% of Ferrari, any Italian will welcome you. It was a sight to be seen and one that summed up the year for many a foreign country welcoming Arab cash into its coffers.

On a wider economic level, however it was the answers, responses and non-responses to a string of tough questions that made 2007 the most significant in the Gulf's 26 year history.

The biggest of these was and still is the sliding US dollar - an issue that has enveloped everyone. Pegged to every GCC currency, bar Kuwait's Dinar, Gulf Central Bank governers faced a barrage of criticism and pressure in the latter part of the year for the way this was handled. News of an imminent revaluation of the UAE Dirham spread quicker than most forest fires with one ArabianBusiness.com story sending the dollar to a 17 year high against the Emirates' currency. But to no avail, no revaluation came, however the knock-on effects have been and continue to be enormous. Indian and South East Asian labourers on major building sites in the UAE, for example, laid down their tools and went on several strikes in protest at poor pay. It's simple, the Rupee is worth far less (As is the pound Sterling - when I first arrived in January 2006 at 6.0 Dirhams compared to 7.6 Dirhams today) than it was 12 months ago and if you're earning as little as $150 a month, every penny counts.

Inflationary rates reached new highs across the GCC with rents soaring and demand outstripping demand in Dubai, staple foods such as rice and bread rose to record levels leaving those who earn the least even more out of pocket, while fuel prices, although low in global comparisons also increased. Wages, however, remained stagnant in many sectors and expatriates of all nationalities now spend far less than they were a year ago as well as potentially also re-thinking their decision to live, work in the Gulf or leave their countries of origin for a place in the sun. These issues will have to be addressed in the early part of 2008 or the pain will almost continue to spread until certain people can take no longer take it.

Sheikh Mohammed Bin Rashid Al Maktoum, Vice President and Prime Minister of the UAE and Ruler of Dubai answered several of the region's most important questions including calling the policy-making role of ministries and the co-operation between federal and local authorities "confused", "lacking strategic planning" and suffering from deficiencies in the legeslative and regulatory framework. He even went as far as to say that federal institutuions were "slow-paced and that the justice ministry in particular was "20 years behind the times" - all this in front of 1000 of the Emirates' top officials and most influential decision makers. If that wasn't enough sustainable green building regulations for all new construction was introduced and the Ruler announced that journalists would no longer be sent to jail if they were found guilty of libel.

So it was worth sticking my neck out then. Eid Mubarak and Merry Christmas to you all, and I hope you all have a very happy New Year.

Comments (6)

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Fundamental errors
Posted by James, Dubai, UAE on 26 January 2008 at 12:49 UAE time

Try - sent the US dollar to a 17 year LOW, not high. And the Ruppee is worth far MORE than it was 12 months ago.

By the way being proud of the chaos that ensued following your stroy on the dollar depeg is nothing to be proud of, if that what your implying happened.

HSBC and other major banks were profiteering in the aftermath buying dollars at 3.40 and selling at 3.69? Best of both worlds for them? Or just covering themselves? But a disaster for everyday businesses and people who were stuck with dollars and debts in dirhams... all on the back of mere speculation - go the market economy?!?. The banking industry - along with Arabian Business should be ashamed.

Review 2007
Posted by N. A. Mirza, Jeddah, Saudi Arabia on 31 December 2007 at 17:39 UAE time

Looks sound and indeed worth preserving. December Timeline should have stories on the most peaceful and accident free Haj, BJP's history-making victory in India's western state of Gujrat and above all assassination of Benazir Bhutto. An analysis on King Abdullah's sincere peace efforts was a must.

Editor's reply: December's timeline will be updated with the happenings of the last two weeks of December shortly.

BEST AND WORST NEWS OF 2007!
Posted by RAJENDRA ANEJA, DUBAI, UAE on 27 December 2007 at 11:50 UAE time

Best news:

1. Some peace in Iraq and refugee return.
2. More focus on climate
3. Dialogue between Bush, Putin
4. No war with Iran
5. Talks between Israel, Palesine
6. Shakira going to study at a university


Worst news:

1. Continuation of world poverty
2. No cure for Aids, cancer
3. Human rights violations and beating of monk in Burma
4. Inflation across the word, including Gulf.
5. Instability in India, Pakistan.
6. I have not become a movie-star (the pay is better, than that in management).

REVIEW 2007: PROFITS AND SOUL
Posted by RAJENDRA ANEJA, DUBAI, UAE on 26 December 2007 at 17:04 UAE time

The review writtn by Mr James Bennett, is sound, pithy and covers all key issues. Congratulations for this excellent encapsulation.

I hope 2008, will be a more enlightened year for the Gulf and for all of us. Let us hope, we realise that money is important, but without good HR practices, there can be no profits in the long run.

And as the Bible preaches, "What does it profit a man to gain the whole world, at the loss of his own soul."

Brilliant
Posted by Frank Dane, Dubai, United Arab Emirates on 26 December 2007 at 11:26 UAE time

That is one of the best Year in Reviews I have seen. Really polished - especially on the later months - October to December. I love it. Thank you - another great reference site, and hugely entertaining as well.

Pressure mounts on last female minister to quit
Posted by Adam, Kuwait, Kuwait on 25 December 2007 at 08:53 UAE time

The Kuwait government needs to get a life.. The men in parliament cannot handle a women minister. I admire her and for what she is doing and putting all these silly men to shame.. Wake up guys...

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