Economists in the Middle East believe the euro-zone deal hammered out last week, without British involvement, does not mark the end of the European financial crisis. Volatility and uncertainty could increase in the region in the weeks ahead and harm GCC economies, they say.
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On Friday, an EU summit in Brussels agreed on a package of measures to attempt to end the ongoing crisis over high levels of debt in the banking and sovereign sectors.
But Britain vetoed the possibility of a more integrated EU, backed by a new treaty, which many in the financial markets believed essential to end the crisis.
Tim Fox, the head of research and chief economist at Emirates NBD, the UAE's biggest bank, said: "Because of the UK opt-out, it is probably a less robust deal than it would have been if the 27 [members of the EU] had agreed. That would have thrown the full force of the EU behind it. "But now it will be an intergovernmental arrangement, and therefore more uncertain in its effectiveness."
Marios Maratheftis, the head of Middle East research for Standard Chartered said "what we saw from Brussels does not solve the problem". "To satisfy markets we need to see a viable lender of last resort in Europe, which means the European Central Bank [ECB], and some stimulus and reflation in Germany," he said.
The crucial test for the financial markets has been the willingness of the ECB to buy bonds from indebted banks, and while the ECB has increased by €500 billion (Dh2.45 trillion) the firepower it has to do this, some in the markets worry whether this will be enough to halt runs on "peripheral" countries such as Italy and Spain.
"I don't think they [ECB] have enough to give the market confidence and stability. It leaves something to be desired," Mr Fox said. "A lot can happen between now and the March deadline for implementing these measures."
Another area of concern for Middle Eastern economies is the increased need for capital by European banks, many of which have been investors in regional economies and participants in financial restructurings in some parts of the Gulf.
Last week it emerged that European banks, including the strongest in Germany, will need €114.7bn of new capital by next year to meet "stress tests" put in place by the EU authorities.
"There will be more deleveraging and less capital available, and the Gulf region will have to look elsewhere, to alternative sources, for capital," Mr Fox said. "Refinancings and raising new finance are going to be that much harder."
Mr Maratheftis said: "Global liquidity will be affected, but the GCC region is well placed in this regard, as it is a net exporter of capital. But private-sector liquidity will remain tight, and this will affect the maturity of bonds in the coming year in a place like Dubai."
A banker who declined to be identified said: "The big risk for Dubai and other highly indebted economies is that the European banks will simply pull out of restructurings going on now. They will not be able to roll over or refinance borrowings if they are under severe pressure themselves at home. All EU banks, including the British, which are big creditors here, will be much more risk-averse."
If the EU summit deal does not halt the ongoing crisis in the euro zone, it will also hurt the global economy, of which the Middle East is an integral part.
"The UAE, for example, does not export that much to the euro zone, and you could argue that a cheaper euro will make UAE imports cheaper," Mr Fox said. "But that benefit will probably be counterbalanced by the overall impact on global trade if the euro zone breaks up."
Said Hirsh, a Middle East analyst at the London consultancy Capital Economics, said there could be repercussions for the energy sector from the events in Europe.
"What should worry the Gulf is how a crisis in the euro zone affects the rest of the world, and Asia in particular," he said. "If there is a slowdown in economic growth, it will affect demand for and the price of oil, and some Gulf countries could go into deficit. They have high commitments to public spending right now, and that could be affected. A diversified economy like the UAE could be more exposed to a slowdown in global growth and a fall in oil demand, but Saudi Arabia and Kuwait would see a big hit to revenues."
Mr Maratheftis said: "This is a western crisis, originating in the US and now rolling over to European sovereigns. But not everything in the world is broken. The emerging markets are not broken."
He added that economic growth in the UAE would probably be slower next year as a result of the euro-zone crisis.
fkane@thenational.ae
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MATCH INFO
Uefa Champions League final:
Who: Real Madrid v Liverpool
Where: NSC Olimpiyskiy Stadium, Kiev, Ukraine
When: Saturday, May 26, 10.45pm (UAE)
TV: Match on BeIN Sports
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Germany: PKK collectors typically bring in $18 million in cash a year – amount has trebled since 2010
Revolutionary tax: Investigators say about $2 million a year raised from ‘tax collection’ around Marseille
Extortion: Gunman convicted in 2023 of demanding $10,000 from Kurdish businessman in Stockholm
Drug trade: PKK income claimed by Turkish anti-drugs force in 2024 to be as high as $500 million a year
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Contributions: Hundreds of euros expected from typical Kurdish families and thousands from business owners
TV channel: Kurdish Roj TV accounts frozen and went bankrupt after Denmark fined it more than $1 million over PKK links in 2013
The%20specs
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Mohammed bin Zayed Majlis
Opening Premier League fixtures, August 14
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- Chelsea v Crystal Palace
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Bantamweight
Victor Nunes (BRA) beat Siyovush Gulmamadov (TJK)
(Split decision)
Featherweight
Hussein Salim (IRQ) beat Shakhriyor Juraev (UZB)
(Round 1 submission, armbar)
Catchweight 80kg
Rashed Dawood (UAE) beat Otabek Kadirov (UZB)
(Round-1 submission, rear naked choke)
Lightweight
Ho Taek-oh (KOR) beat Ronald Girones (CUB)
(Round 3 submission, triangle choke)
Lightweight
Arthur Zaynukov (RUS) beat Damien Lapilus (FRA)
(Unanimous points)
Bantamweight
Vinicius de Oliveira (BRA) beat Furkatbek Yokubov (RUS)
(Round 1 TKO)
Featherweight
Movlid Khaybulaev (RUS) v Zaka Fatullazade (AZE)
(Round 1 rear naked choke)
Flyweight
Shannon Ross (TUR) beat Donovon Freelow (USA)
(Unanimous decision)
Lightweight
Dan Collins (GBR) beat Mohammad Yahya (UAE)
(Round 2 submission D’arce choke)
Catchweight 73kg
Martun Mezhulmyan (ARM) beat Islam Mamedov (RUS)
(Round 3 submission, kneebar)
Bantamweight world title
Xavier Alaoui (MAR) beat Jaures Dea (CAM)
(Unanimous points 48-46, 49-45, 49-45)
Flyweight world title
Manon Fiorot (FRA) v Gabriela Campo (ARG)
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%3Cp%3EBy%202030%2C%20Abu%20Dhabi%20aims%20to%20achieve%3A%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3E%E2%80%A2%2039.3%20million%20visitors%2C%3C%2Fstrong%3E%20nearly%2064%25%20up%20from%202023%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3E%E2%80%A2%20Dh90%20billion%20contribution%20to%20GDP%2C%3C%2Fstrong%3E%20about%2084%25%20more%20than%20Dh49%20billion%20in%202023%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3E%E2%80%A2%20178%2C000%20new%20jobs%2C%3C%2Fstrong%3E%20bringing%20the%20total%20to%20about%20366%2C000%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3E%E2%80%A2%2052%2C000%20hotel%20rooms%2C%3C%2Fstrong%3E%20up%2053%25%20from%2034%2C000%20in%202023%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3E%E2%80%A2%207.2%20million%20international%20visitors%2C%3C%2Fstrong%3E%20almost%2090%25%20higher%20compared%20to%202023's%203.8%20million%3C%2Fp%3E%0A%3Cp%3E%3Cstrong%3E%E2%80%A2%203.9%20international%20overnight%20hotel%20stays%2C%3C%2Fstrong%3E%2022%25%20more%20from%203.2%20nights%20in%202023%3C%2Fp%3E%0A
Real estate tokenisation project
Dubai launched the pilot phase of its real estate tokenisation project last month.
The initiative focuses on converting real estate assets into digital tokens recorded on blockchain technology and helps in streamlining the process of buying, selling and investing, the Dubai Land Department said.
Dubai’s real estate tokenisation market is projected to reach Dh60 billion ($16.33 billion) by 2033, representing 7 per cent of the emirate’s total property transactions, according to the DLD.
The rules on fostering in the UAE
A foster couple or family must:
- be Muslim, Emirati and be residing in the UAE
- not be younger than 25 years old
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- be free of infectious diseases or psychological and mental disorders
- have the ability to support its members and the foster child financially
- undertake to treat and raise the child in a proper manner and take care of his or her health and well-being
- A single, divorced or widowed Muslim Emirati female, residing in the UAE may apply to foster a child if she is at least 30 years old and able to support the child financially
Nayanthara: Beyond The Fairy Tale
Starring: Nayanthara, Vignesh Shivan, Radhika Sarathkumar, Nagarjuna Akkineni
Director: Amith Krishnan
Rating: 3.5/5
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pakistan Test squad
Azhar Ali (capt), Shan Masood, Abid Ali, Imam-ul-Haq, Asad Shafiq, Babar Azam, Fawad Alam, Haris Sohail, Imran Khan, Kashif Bhatti, Mohammad Rizwan (wk), Naseem Shah, Shaheen Shah Afridi, Mohammad Abbas, Yasir Shah, Usman Shinwari
What is dialysis?
Dialysis is a way of cleaning your blood when your kidneys fail and can no longer do the job.
It gets rid of your body's wastes, extra salt and water, and helps to control your blood pressure. The main cause of kidney failure is diabetes and hypertension.
There are two kinds of dialysis — haemodialysis and peritoneal.
In haemodialysis, blood is pumped out of your body to an artificial kidney machine that filter your blood and returns it to your body by tubes.
In peritoneal dialysis, the inside lining of your own belly acts as a natural filter. Wastes are taken out by means of a cleansing fluid which is washed in and out of your belly in cycles.
It isn’t an option for everyone but if eligible, can be done at home by the patient or caregiver. This, as opposed to home haemodialysis, is covered by insurance in the UAE.
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THE BIO
Age: 30
Favourite book: The Power of Habit
Favourite quote: "The world is full of good people, if you cannot find one, be one"
Favourite exercise: The snatch
Favourite colour: Blue
RUGBY CHAMPIONSHIP FIXTURES
September 30
South Africa v Australia
Argentina v New Zealand
October 7
South Africa v New Zealand
Argentina v Australia
Key facilities
- Olympic-size swimming pool with a split bulkhead for multi-use configurations, including water polo and 50m/25m training lanes
- Premier League-standard football pitch
- 400m Olympic running track
- NBA-spec basketball court with auditorium
- 600-seat auditorium
- Spaces for historical and cultural exploration
- An elevated football field that doubles as a helipad
- Specialist robotics and science laboratories
- AR and VR-enabled learning centres
- Disruption Lab and Research Centre for developing entrepreneurial skills
What is the FNC?
The Federal National Council is one of five federal authorities established by the UAE constitution. It held its first session on December 2, 1972, a year to the day after Federation.
It has 40 members, eight of whom are women. The members represent the UAE population through each of the emirates. Abu Dhabi and Dubai have eight members each, Sharjah and Ras al Khaimah six, and Ajman, Fujairah and Umm Al Quwain have four.
They bring Emirati issues to the council for debate and put those concerns to ministers summoned for questioning.
The FNC’s main functions include passing, amending or rejecting federal draft laws, discussing international treaties and agreements, and offering recommendations on general subjects raised during sessions.
Federal draft laws must first pass through the FNC for recommendations when members can amend the laws to suit the needs of citizens. The draft laws are then forwarded to the Cabinet for consideration and approval.
Since 2006, half of the members have been elected by UAE citizens to serve four-year terms and the other half are appointed by the Ruler’s Courts of the seven emirates.
In the 2015 elections, 78 of the 252 candidates were women. Women also represented 48 per cent of all voters and 67 per cent of the voters were under the age of 40.
Formula Middle East Calendar (Formula Regional and Formula 4)
Round 1: January 17-19, Yas Marina Circuit – Abu Dhabi
Round 2: January 22-23, Yas Marina Circuit – Abu Dhabi
Round 3: February 7-9, Dubai Autodrome – Dubai
Round 4: February 14-16, Yas Marina Circuit – Abu Dhabi
Round 5: February 25-27, Jeddah Corniche Circuit – Saudi Arabia
