By Courtney Trenwith and Reuters
Donald Trump’s surprise presidential win is expected to rattle financial markets globally for some time to come, with the Middle East particularly watching to see how the contradictory, unpredictable Republican will lead the world’s most powerful country.
Global financial markets are expected to continue to react this week to the surprise election of Donald Trump as US president, while the world eagerly waits for clarity on how he will govern the most powerful country.
In scenes reminiscent of June’s shock Brexit vote, stock markets, currencies and commodities were sent on a rollercoaster ride as the Republican progressed towards the White House. Trump’s conciliatory victory speech helped to restrain some losses hours later, but analysts say the global economy will remain volatile for weeks, and even months, to come.
The oil-reliant and emerging economies of the GCC are expected to be among those markets that will feel the strongest reverberations of Trump’s surprise win.
“The main question going forward is, whether Trump will follow through with the policies he’s promised,” FXTM chief market strategist for the Gulf and Middle East, Hussein Al Sayed, says. “It’s very unpredictable now.
“Trump will add to the challenges of the oil-exporting countries because [his election] will lead to weaker economic growth [globally].”
The Economist Intelligence Unit gave a sombre outlook in its response to the result.
“Mr Trump’s election victory will cause widespread alarm across the global economy, given his loose grasp of economic policy, unabashed political populism and tendency for contradiction,” an updated forecast released on November 9 said.
“We expect to see wild gyrations in bond, stock and currency markets until Mr Trump provides some clarity on his policy agenda. Given this volatility, it is unlikely that the Federal Reserve (the central bank) will raise interest rates in December, as we had previously expected.”
The task of oil-exporting countries to boost prices will be much harder under Trump, analysts say. Oil quickly recovered early losses of almost 4 percent on November 9, reversing the trend to trade above $46 a barrel on November 10. But a sourer outlook for the global economy under a Trump presidency would likely lead to weaker demand for crude.
Trump also has said he wants to increase the US’s oil output, pledging to open all federal land and waters for fossil fuel exploration.
His promises to tighten policies on Iran just as oil companies are beginning to slowly return to the Islamic Republic also could change the internal dynamic within the Organization of Petroleum Exporting Countries (OPEC), whose 14 members include Saudi Arabia, the UAE, Kuwait and Iran.
“Buckle up your seatbelts for a more turbulent and uncertain global economy that is ahead,” Pulitzer Prize-winning US oil historian Daniel Yergin, vice-chairman of the IHS Markit think tank, says.
“The outcome of the US election adds to the challenges for the oil exporters because it will likely lead to a weaker economic growth in an already fragile global economy. And that means additional pressure on oil demand.”
OPEC sources said they expected oil to remain weak in the days and weeks ahead due to worries about the global economy and uncertainty about Trump’s policies for the Middle East.
A second source said OPEC’s meeting on November 30 might fail to have a strong impact on prices even if it strikes a deal to limit output: “I don’t think prices will go up much more than the current levels.”
Trump’s energy policies have been limited in detail so far. But what he has said will be seen as supportive for the share prices of US independent oil and gas producers as well as oil majors with large exposure to the US shale industry, such as Chevron, ExxonMobil and Shell.
Trump has criticised the West’s nuclear deal with Iran, adding to uncertainty and frustrating Tehran’s push for foreign investment to revive its economy.
But his stance may work in his favour when dealing with the GCC, and have some implications supportive of oil prices, analysts say.
“There are a lot of unknowns about what will be the Trump position in the geopolitics of the Middle East,” says Olivier Jakob, analyst at consultancy Petromatrix.
“President Obama from the start of his election worked towards a with Iran and we can’t be sure that President Trump will continue in the same direction.”
Iran said Trump should stay committed to the nuclear deal struck under the Obama administration.
Iran’s President Hassan Rouhani said the US election results would have no effect on Tehran’s policies, according to state news agency IRNA.
“Iran’s policy for constructive engagement with the world and the lifting of nuclear-related sanctions have made our economic relations with all countries expanding and irreversible,” Rouhani said.
He added that Iran’s nuclear deal with six world powers has been reflected in a United Nations Security Council resolution and cannot be dismissed by one government.
In the GCC, leaders congratulated Trump and offered what could be described as a peace offering, following the Republican’s unashamedly offensive comments about Muslims and the Middle East. Their messages were laced with calls for reconciliation.
“We look forward to sharing our message of hope, peace, tolerance and development for a better world,” Sheikh Mohammed Bin Rashid Al Maktoum, vice president and prime minister of the UAE and ruler of Dubai, tweeted.
The UAE’s Minister of Economy, Sultan Bin Saeed Al Mansouri called for cooperation. “The UAE has always been a promoter of opening doors and not building walls,” he said. “What we all need right in this world now which is a better understanding between people, religions, background.”
Despite Trump’s declaration that he was “not a fan” of Saudi Arabia, King Salman Bin Abdulaziz wished the president-elect success in “achieving security and stability in the Middle East and the wider world”, highlighting the kingdom’s priority in its relations with the US, which have soured under the Obama administration.
The GCC leaders will now need to deal with Trump when seeking US help to end wars from Syria to Mosul.
Without clear policies, there is anxiety over whether Trump could upend a regional order that has prevailed for decades.
In particular, there are worries that Trump’s hostile rhetoric towards Muslim migrants will play into the hands of ISIL and Al Qaeda.
Gulf leaders want a US president who understands their concerns after eight years of what they regard as diffidence under President Obama, someone who did not provide the kind of personal contact they value.
Opinion is divided about whether Trump’s remarks on the campaign trail will be enacted when in office.
Dubai billionaire Khalaf Al Habtoor said he believed Trump’s offensive comments during the long presidential campaign were purely politics and “talk is cheap”. The fact the American people had voted for him means “he’ll be the right man”, Al Habtoor said.
“His comments were for the election only,” Al Habtoor said.
Speaking to Arabian Business on November 9, the billionaire developer behind multiple hotels and residential complexes in Dubai, toned down his critique of Trump, who he previously called “a loose cannon” and “the biggest enemy of Islam”. In May, he said US-Arab relations would deteriorate if he was elected.
But as Hillary Clinton prepared to concede defeat, Al Habtoor said the GCC could work “very well” with Trump as the next US president.
He said he expected Trump would now tone down his rhetoric and strive to build better relations with the GCC.
“He has no choice except to create great relations,” Al Habtoor said.
“I don’t think Trump is an idiot; he’s a clever man and knows how to do things.
“[He] needs to re-establish the long relationship the GCC has with America … because this is very important. Everyone in the world, in the US, and us here in the GCC, have our own interests. I don’t blame the US, they have interest priorities to them and we have interest priorities to us, as well.
“I think we can work together very well, provided [Trump] has a new, clean page, a white page, to open it and to put things transparently to us.”
He said GCC leaders also would be willing to offer a clean slate if treated properly by Trump.
“It depends on [Trump’s] approach. If [his] approach is equal, the same level, then definitely it’ll be accepted. But anyone who looks down on us, we will not welcome that at all,” Al Habtoor said.
“Donald Trump is not an easy person. He should communicate in the right terms and not dictate, because that will never be accepted.”
Al Habtoor’s comments are tepid compared to his earlier critiques. He no longer rules out working with the American.
Other GCC businessmen had severed ties with Trump following his calls to ban all Muslims from the US.
Damac Properties, however, had remained stoic. When the business tycoon’s comments turned vitriol, the developer was notably swift in its decision to pull down advertising for its Trump-branded golf course and surrounding villas. The development’s opening this year passed by distinctly quietly compared to the headline-grabbing parade in 2014 when Trump travelled to Dubai for the golf course’s first tee-off.
Damac Properties would not comment on the presidential election, highlighting that its relationship was with the Trump Organization and “not the individual”.
While the “Trump effect” on the development may have been concerning a week ago, the Republican’s win could see his face return to Damac promotional material.
Gulf airlines will also be wondering about the “Trump effect” as they oppose calls for the US to review its open skies agreement with GCC states amid allegations from American carriers of government subsidies.
Trump’s protectionist rhetoric leaves open the possibility of an escalation in the open skies war. However, the chairman of Republicans Abroad, Steven Anderson, insists that Trump will be good for business in the GCC.
“Trump has a history with the [United Arab] Emirates in particular, and a very good, positive history. There’s no history… of having an issue with the Emirates, so he’ll still be pushing for business in the region,” Anderson says.
“[Even] if I was neutral, I’d be much happier knowing Trump was president because he’s made it clear he doesn’t like to mess around; he wants to get down to business.
“He’s tough handed about it but on the other hand, is that worse than having Hillary in the administration over the last eight years?
“Why would anyone feel more secure with someone who was part of the US government that caused havoc in the region? I think people should be happy the US wants to clean up the mess and literally and figuratively get down to business.”
Of course, Anderson’s counterpart for Democrats Abroad-UAE, Orlando E. Vidal, is far more pessimistic.
“Don’t listen to the media, don’t listen to the pundits, don’t listen to the experts, or the political talking-heads,” he says. “Above all, don’t trust any polls. The people have spoken. Sometimes the people get it wrong. But that’s democracy. I say a prayer for my country, a prayer for this region, and a prayer for the world.”
While new leaders often cause some uncertainty, a Trump presidency will be unequivocally the most unpredictable the world has seen in a long time.