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Thu 9 Jun 2011 02:56 PM

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Lessons from the past

Regional integration is drawing on a rich heritage of economic development

Lessons from the past
Lessons from the past
The Great Wall of China at Jiayuguan was once part of the Old Silk Road

Regional rail projects have received much attention of late. It is estimated that the total rail market in the MENA region, including rolling stock, rail services and operations, will be worth $8.8bn by 2015, according to a Boston Consulting Group study undertaken by the European rail industry. Meanwhile the GCC is planning to build a regional rail network linking its six member states by the end of the decade. The impact of this mammoth undertaking in terms of regional integration cannot be underestimated.

However, there is a lot of historical tradition to draw on. For example, the Berlin to Baghdad railroad of 1913 was an early attempt at regional integration, but it did not survive as a viable link. If it had succeeded, the region would in all probability have become much more integrated with Europe.

Then there was the Hejaz Railroad of 1914, which aimed to convey Haj pilgrims quickly and efficiently all the way from Istanbul and Damascus to Medina and Makkah. Incredibly, it has taken over a century for the underlying impulse of this project to ultimately be realised. Another reason that the Hejaz Railroad did not survive, of course, was Lawrence of Arabia.

He might have prevented Turkish troops from using the link by blowing it to pieces, but an unfortunate side-effect of this was a legacy of under-developed transportation systems, which is only beginning to be rectified now.

It is not only rail networks that have a rich history in the region, but roads as well. For example, in Roman times, it was possible to travel from Mauritania all around the Mediterranean to what are now known as Portugal and Spain on Roman-built roads - which reminds one of the old adage that ‘all roads lead to Rome’.

Much of this ancient Roman infrastructure still lies buried in countries like Tunisia, Morocco and Libya. What was incredible about the Romans is that they solved the problem of logistics and regional integration over 2,000 years ago. They had unified customs procedures and regular border patrols.

Then, of course, there was the fabled Old Silk Road which linked China to Europe and the Middle East. China used to be the world’s biggest economy, and is expected to take up this mantle again in less than five years. Nowadays the Old Silk Road route has been replaced by Emirates Airlines, with the average airplane carrying the equivalent of multiple camel caravans.

It is clear that, as much as the world has changed, history is a tide that ebbs and flows. The GCC member states are all investing heavily in infrastructure, and are now taking the next step of integrating their efforts. Transportation, energy, water and electricity networks are all being linked together. This will bring economies of scale, in addition to all the benefits of networked markets, as well as lower overall costs for conducting business.

A simple example of the benefits of such a strategy is that neighbouring Sharjah will no longer be plagued by summer power outages once the GCC-wide electricity grid is up and running. Also, Dubai is likely to become the logistics hub for the entire region, as it fulfills its economic destiny of transforming into the New Silk Road.

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