Page 138 - Aamir Rehman - Dubai & Co Global Strategies for Doing Business in the Gulf States-McGraw-Hill (2007)

122 Dubai & Co.

As its neighbors develop “international financial centers” and
offshore havens, Bahrain’s role as the GCC’s banking hub
has increasingly become threatened. Dubai, with its Dubai
International Financial Centre, is perhaps the most serious threat:
the lifestyle of the UAE combined with attractive, more liberal
regulations creates an appealing environment for many interna-
tional bankers. “Selling” Bahrain to an expatriate banker can be
much harder than selling Dubai. One compelling factor in favor of
Dubai, Doha, and even Saudi Arabia’s King Abdullah Economic
City, is the recent increase in local investment and infrastructure
projects. As being “close to the client” is generally helpful in finan-
cial services, these other cities—closer to many large projects—
become more attractive homes for financial services institutions.
Bahrain is investing heavily in its Bahrain Financial Harbor
and other projects in an effort to retain its leadership as the region’s
banking hub. Just as New York’s Wall Street needs to work actively
to retain its luster relative to London, Bahrain must continually
upgrade to maintain its pivotal role.

KUWAIT: COMFORT AND VULNERABILITY
Kuwait, the small and oil-rich state, has enjoyed remarkable
prosperity for decades. This prosperity has made the country a
perennial exporter of capital to global and (increasingly) regional
markets. Kuwait’s prosperity has also made it a target of aggression
by Iraq, whose 1990–91 invasion and occupation of the country was
a defining event in the Kuwait’s recent history.
Kuwait awarded its first oil concession in 1934, to a
joint British-American venture. By 1976, however, Kuwait had
nationalized its oil company in order to control its resources more
directly. Kuwait has the world’s fourth-largest oil reserves,
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controlling more than 8 percent of the world’s oil. Like other oil
producers, the country experienced an upturn in prosperity during
the oil boom of the 1970s. As Kuwait’s population has always been
small relative to its oil resources, the state has been able to channel
wealth into domestic services and international investments at a
remarkable level.
About half of Kuwait’s 2.5 million residents are Kuwaiti
citizens. These citizens enjoy a wide range of social benefits