The Global Financial Crisis

On November 23, 2008, the Brookings Doha Center, a Project of the Saban Center for Middle East Policy, hosted a policy discussion and lunch at the Doha Ritz Carlton on the subject of the global financial crisis and the countries of the Gulf Cooperation Council (G.C.C.). The talk, which featured panelists Ibrahim Oweiss, visiting professor at the Georgetown School of Foreign Service in Qatar, and Nadim Al Mallah, business news anchor and editor for Al Jazeera, examined both the impact of the crisis on the economic growth of the G.C.C. and the media’s role in educating and influencing Gulf investors. Hady Amr, director of the Brookings Doha Center, and fellow at the Saban Center at Brookings, moderated the discussion.

Professor Oweiss spoke first, opening the discussion by mentioning his disappointment in the recent G20 meeting in Washington, DC, which in his view failed to produce a serious, concrete plan for the economic recovery process and instead, only reiterated the need for cooperation without an outline for an effective strategy. He then explained what he believed to be the main reasons for the current economic situation, citing both U.S. fiscal policy and monetary policy. Oweiss stressed the danger of this “unbridled individualism” noting that it was the lack of regulations and control that has put the world in such hard economic times. As a result, he said that while certainly capitalism will remain as the central organizing principle of the global economy, the brand of American capitalism that has been so dominant would need to be modified. As for the effect of the crisis on the G.C.C. in particular, perhaps most noticeably, the price of oil will continue to drop as demand decreases because of the slowing down of the “industrial wheel.” Oweiss warned that we may have only seen the beginning of the coming depression and he predicted that these impending harsh times will definitely cause a rise in unemployment. As real estate ventures are halted or postponed, the effect of the financial crisis on the G.C.C. will become quite visible.

Mr. Nadim Al Mallah on the other hand, based on his six years as a business news editor and anchor for Al Jazeera, focused on the role of the media in the economic crisis. He mentioned that neither the Western nor the Middle Eastern media predicted the impending crisis, though he praised some Western media outlets for their concerted efforts to interpret the situation for general public consumption as events unfolded. Al Mallah also stressed the need, particularly in the Middle East, to put more resources into training financial specialists and strengthening university economic programs to increase the number of qualified people reporting on the subject. He also criticized Middle Eastern media for suggesting that the crisis was a remote one that will only affect the West, pointing to several examples of financial institutions in the region announcing that their finances were sound and then shortly after declaring bankruptcy. This lack of transparency on the part of the financial institutions and central banks, continues to be a problem for the media reporting on finance in the Arab world.

The question and answer session was a lively and comprehensive one that brought up additional issues related to the crisis in general and the media’s role in particular. Dr. Oweiss was asked what specific advice he would give to G.C.C. countries right now regarding involvement with Western financial institutions. He suggested that these countries refrain from investment right now in order to not “rock the boat” of their own economic circumstances, saying that, “all of the money of the sovereign funds will not be able to save the current financial situation in the world.” Also, in response to a question about the implications of $700 billion in U.S. government assistance for bailout purposes, Oweiss expanded upon his earlier comments that American’s approach to the free market had already been drastically transformed with increasing state intervention. Several times, he compared president-elect Obama’s role to that of Franklin Roosevelt during the Great Depression as a leader who will need to find a way stimulate an economy in recession.

Regarding the media, both panelists spoke to the somewhat difficult job of the press in these times; while media outlets certainly have a responsibility to be professional and convey accurate information, it is not productive for them to cause public panic. This will remain a difficult balance to attain. Al Mallah emphasized the need for increased transparency on the part of financial institutions and central banks in the Arab world. Since a free-flow of information is vital for free markets to function effectively, more transparency is required for the Arab public and ordinary Arab investors to effectively navigate the investment market.