February 12, 2006
Last week, you would have seen two very different images of the Muslim world. The first is the glossy ad for penthouses in the Gulf. You know the one: it features a huge palm tree development stretching out into the sea.
It looks impressive and, if the marketing is to be believed, all classes of celebrities have already signed up. The overall impression is one of prosperity, good times, jet-skis, lobster thermidor and security.
In stark contrast, the second image is the madness of burning Danish flags, Danish embassies and even EU buildings in the West Bank. It is an image of destruction, atavism, chaos, mob rule and lawlessness. It screams of a clash of cultures, a holy war and Armageddon.
Yet these two images are directly linked by the price of oil and what it means to us, the west, and to them, the east.
To appreciate the link between Philippe Starck kitchens overlooking the sands of Dubai and the ï¿½spontaneousï¿½ outburst of Muslim anger towards what many would consider mildly offensive, but ultimately silly, cartoons, we have to appreciate how oil money is being used around the world.
Letï¿½s examine the first of these issues: the property boom in the Gulf. Why is this happening? Why are the Gulf states now a magnet for tourism and development?
Who is paying for all this? And what else is being financed?
The property boom in the Gulf, and Irish speculation there, starts at our petrol pumps. Every time you fill up with expensive petrol, some of the cash goes straight to the oil producers. Most economic analyses coming from banks and stockbrokers look at how higher oil prices affect us – but the analyses stop there.
The really interesting geopolitical question is what happens to the money after it has left us. It doesnï¿½t evaporate into thin air: it goes somewhere, and somebody receives it. Yet we have heard incredibly little about what happens at the other end of the barrel of oil, to the people who sell the stuff.
We all know that the biggest oil-producing countries are the Arab states in and around the Persian Gulf. What are they doing with the money? Unlike in the 1970s, a large proportion of the money flowing into Saudi Arabia and the Persian Gulf is now staying there. The result has been a phenomenal boom in the few tradable assets available in this region, primarily the small but rapidly growing stock exchanges and the property markets.
The boom has been so pronounced that prices have quickly reached levels considered to reflect gross over-valuation, so that local investors are moving steadily further afield, albeit still within the Arab world.
On the other hand, although Middle Eastern money is active in western stock and property markets, it is certainly not the prominent player it was in the 1970s and early 1980s.
The man responsible for that is Osama bin Laden. It is very doubtful that he intended the September 11 attacks to spur the rise of an equity culture in the homeland of the prophet or to create tourist playgrounds for semi-naked infidels on jetskis on islands off the Persian Gulf. But that is what happened.
The post-9/11 atmosphere in the US is one of overt suspicion and barely concealed hostility towards Arabs, especially Saudis. Not surprisingly, many of them have taken the hint, and taken themselves and their money back home. This has resulted in huge price rises and rampant speculation in property.
The traditionally delinquent Arab governments have also changed their behaviour.
They have been hyper-responsible in the way they have spent this windfall. The Saudis have used the extra revenues to eliminate the hefty debts they accumulated in the years of low oil prices; they have also doubled and tripled their spending on infrastructure projects to try and spur the growth of non-oil sectors in the kingdom.
The results have been, by any standards, highly impressive: growth has been rapid and diversified, and the pace of structural reform, always frustratingly slow in the Arab world, has picked up noticeably, with several key measures legislated for and implemented.
So, unlike the 1970s when they blew their cash on yachts and vanity properties like the Savoy in London, this time round they are content to invest sensibly (and allow the free-spending Irish to outbid them for Londonï¿½s finest trophy assets).
Bin Laden and his friends are probably none too happy about any of this newfound responsibility, because one of his trump cards was the ability to portray the ruling Arab elite as corrupt, bloated and self-serving, in contrast to the suffering of the ordinary man in the souk.
While he still has a point, the elite rulers are doing their best to rectify the situation on two fronts. The first one is economic and the second is the much less well understood religious one.
On the economic front, they have tried to get their act together. It is clear that the Saudi elites have woken up to the threat of economic underachievement which characterised the wasted windfall of the 1970s and 1980s. So they are spending judiciously, complementing the property and infrastructure boom.
So far, so traditional. Throwing money at the problem is nothing more than a 21st century version of ï¿½ï¿½killing Home Rule with kindnessï¿½ï¿½. But their other way of placating Bin Ladenï¿½s threat is much more worrying for us.
Despite indirectly causing a property boom in the cradle of Islam, Bin Ladenï¿½s friends can console themselves with the thought that they, too, are direct and major beneficiaries of the oil boom.
This was not understood particularly well in the 1970s, but today we know a great deal about the deep links between the Saudi royal family and government and the kingdomï¿½s religious establishment.
The former have financed and aided the latter in spreading the Saudi brand of Islam, Wahhabism.
In recent years, it has become clear just how virulently it is anti-western this creed is; it is anti-Christian, anti-Jewish, even anti-Shiite Muslim – and now specifically anti-Danish. Indeed, anti-everybody who doesnï¿½t accept its version of the truth.
We now know that Saudi-financed madrasahs in Pakistan were the breeding ground for the Taliban, the 9/11 hijackers and two of the London bombers. Some of the graduates of these extremist academies are now blowing up ordinary Iraqis every day; others serve as imams in places like London and Amsterdam, where they preach hatred and violence to young Muslims from local and immigrant communities.
These madrasahs have served to radicalise Muslim youth, both Sunni and Shiite, all over the world. Even in places where the firebrand imams are not preaching directly, their influence has forced many otherwise moderate Muslims to genuflect before a pure version of Islam that most were never brought up with.
So, the next time you fill up your car, remember that you are not only enhancing the fortunes of stockbrokers in Dubai, Irish property speculators and Dream City developers; you are also contributing directly to the system dedicated to brainwashing young people so that they might burn Danish flags, threaten non-believers, and spew vitriol towards the west . . . or worse.