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The Importance Of Abu Dhabi To The Global Economy & Mansour's Role.

In his early 30s, Shaikh Mansour bin Zayed, is one of the exceptionally bright sons of the late Shaikh Zayed ibn Sultan al-Nahyan - the ruler of Abu Dhabi and the founding president of the state-shaikhdom United Arab Emirates (UAE), who died in 2004. The emirate of Abu Dhabi has become so wealthy, accounting for over 90% of the union's oil and natural gas reserves, that it is far more powerful than the whole UAE - despite fierce competition from neighbouring Dubai. The city of Abu Dhabi is the capital of the UAE.

The Abu Dhabi emirate, however, keeps such a low profile that it often tends to hide its rapidly-growing importance to the global economy, with its financial wealth larger than that of the whole of the six-state Arab Gulf Co-operation Council (GCC region). This is especially at this time of crisis which has spread from the US to almost every part of the globe. Even Iran, whose Shi'ite theocracy is isolated internationally because of its regional and nuclear ambitions, is seeing its command economy imploding (see below and Gas Market Trends of this week).

Alone ADIA's liquid and semi-liquid assets now are estimated to be worth about $1 tn, by far the largest SWF in the GME. The recent sharp falls on the Kuwait stock market has served as a warning to Kuwait's GCC partners. Yet these states are in far better shape than in the other emerging economies (EEs), such as Brazil, China, India, Iran, or Russia (see gmt19GCC-GMEfinlCrisisNov3-08).

Apart from being chairman of IPIC, Shaikh Mansour is the billionaire half-brother of Abu Dhabi Ruler and UAE President Shaikh Khalifa bin Zayed, as well as being the minister for UAE presidential affairs. This is a key position as Shaikh Mansour sets the tempo for the federal administration from the UAE presidency. Equally important, Mansour is married to the daughter of the billionaire ruler of Dubai, Shaikh Muhammad bin Rashed al-Maktoum who is the UAE's vice-president (VP) and prime minister (PM).

Shaikh Mansour is a full-brother of Abu Dhabi Crown Prince and Chairman (PM) of the emirate's Executive Council (cabinet) Shaikh Muhammad bin Zayed who is the strongman of Abu Dhabi and today is informally described as the most powerful man in the UAE. Mansour's other full-brothers include UAE Deputy PM Shaikh Hamdan, UAE Foreign Minister Shaikh 'Abdullah, ADIA Chairman Shaikh Ahmad, UAE Interior Minister Gen Shaikh Saif, and several others who all hold key positions in Abu Dhabi and/or in the UAE. Muhammad bin Zayed, a Lt Gen, is the deputy supreme commander of the UAE Armed Forces (UAF) and, as such, he is the chief rival of Dubai Ruler Muhammad bin Rashed who remains the UAE defence minister.

There is a latent power-struggle between Muhammad of Dubai and Muhammad of Abu Dhabi. With the global economic crisis having hit Dubai harder than any other emirate in the GCC region, in financial terms Abu Dhabi under Muhammad bin Zayed's control has emerged by far the most powerful state in this oil-rich part of the world. In fact, in terms of financial resources, petroleum reserves and per capita income, the emirate of Abu Dhabi today is the wealthiest part of the world.

This makes Muhammad bin Zayed the most powerful man in the GCC, which is led by Saudi King 'Abdullah ibn 'Abdul-'Aziz who will represent this region at the emergency G-20 economic summit to be held in Washington on Nov. 15. This meeting is supposed to decide the way the OECD powers and leading EEs should solve the global crisis. While no meaningful decisions will emerge from this summit, as most EEs and some OECD powers do not agree with President George W. Bush's effort to keep the US as leader of a un-ipolar world economic order.

Bush is a lame-duck president who is to leave the White House on Jan. 20, immediately after the swearing in of Democratic President-elect Barack Obama, a black man whose stunning election victory on Nov. 4 constituted an earthquake of global proportions. In the history of all the global empires, this is the first time that a black man is elected to head the biggest power in the world. Under Bush, the Nov. 15 summit is not likely to let the US preserve its order over the global economy.

The US bail-out of a mere $700 bn agreed by Bush is far short of what is required for the American economic crisis to be resolved. It is estimated that more than $3 tn in spending will be needed for the global economy to restored to its pre-crisis health. Some of the OECD powers, as well as EEs such as China, Brazil and Russia, are not likely to contribute towards such funding without having the US pay the price of letting the global economic order become multi-polar. But Saudi Arabia, backed by Shaikh Muhammad bin Zayed, is expected to toe the US line as in the case of the UK (as explained in news18GCCinMulti-PolarOrdrOct27-08).

What makes Mansour somewhat unique among the numerous bright sons of the late Shaikh Zayed is that he maintains excellent links with both his full-brother Muhammad bin Zayed and his father-in-law Muhammad bin Rashed. At the same time, however, he follows the instructions of his full-brother, while he merely chooses what suits him from among the suggestions of his father-in-law. With Dubai badly in need of financial support from Abu Dhabi, Shaikh Muhammad bin Rashed is gradually learning to accept the fact that Shaikh Mansour usually ignores any advice from the Dubai ruler which is not acceptable to the Abu Dhabi crown prince.

The emirate of Dubai, the construction sector and property market have been its main sources of wealth in recent years, has been hit hardest by the global crisis among the GCC areas. The collapse of property markets in the West and the credit crunch have caused the growth of Dubai's real estate business to grind to a halt. Now, Dubai property prices and rents are falling rapidly and Shaikh Muhammad bin Rashed is said to be counting on help from Abu Dhabi, with Shaikh Mansour being one of his bridges to the super-rich emirate.

In a deal announced on Oct. 31, both Shaikh Mansour's private investment portfolio management unit and IPIC agreed to jointly own up to 16.3% of Barclays, the third largest bank in the UK. A highly-placed APS source says he only made this move after having received clearance from Shaikh Muhammad bin Zayed, although the idea of him buying into Barclays originated from the Dubai ruler.

Shaikh Mansour's part in the Barclays deal was brokered by Amanda Staveley, a senior partner at the private equity firm PCP Gulf Partners which is close to Shaikh Muhammad bin Rashed. She owned a restaurant near Newmarket race-course where she built a friendship with Shaikh Muhammad bin Rashed, who helped her establish relationships with some of the other wealthy GCC horse breeders. (Shaikh Muhammad bin Rashed is the leading horse breeder in the GCC region).

Ms Staveley helped to close the deal for Shaikh Mansour to buy the Manchester City Football Club in September 2008. She described the Barclays investment as "a vote for the UK financial system as a whole". His move into Barclays has raised Shaikh Mansour's international profile further.

Barclays on Oct. 31 announced that it was raising [pounds sterling]7.3 bn ($11.8 bn) by selling almost a third of its shares to Abu Dhabi (Mansour & IPIC) and Qatar to meet London's new capital requirements for banks without the UK government's help. It said it would sell [pounds sterling]5.8 bn of convertible notes, which could leave the GCC investors with as much as 32% of the bank. An additional [pounds sterling]1.5 bn would be raised by selling securities to new and existing institutional share-holders (see the details of the Barclays deal and background in gmt19GCC-GMEfinlCrisisNov3-08).
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Publication:APS Review Downstream Trends
Geographic Code:7UNIT
Date:Nov 10, 2008
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