Dubai: Obama’s second term could signal further disengagement from direct US intervention in the international arena, but trade relations with the GCC and the UAE in particular will remain strong.
This was one of the significant opinions raised during a panel discussion on the implications of the recent US elections held at Capital Club Dubai.
The discussion was titled ‘Four more years with Obama: the view from the Gulf’ and featured American Business Council of Dubai & the Northern Emirates President and Dechert LLP National Partner John Podgore, Dubai International Capital CEO David Smoot, Standard Chartered Bank senior economist Philippe Dauba-Pantanacce, and was moderated by Emirati writer and commentator on Gulf affairs Mishaal Al Gergawi. It aimed to explore the perceived mandate of the Obama administration’s second term and its implications for the GCC.
In his opening statement David Smoot, who has a 16-year track record in the banking and private equity industry, expressed a bullish economic view, saying: “Obama had a tough start in terms of the economy, but he’s due to inherit a boom in the next few years and the knock-on effects of that around the world and in the GCC in particular will be extremely positive.”
He went on to comment that there were currently talks on the table of putting in place free trade agreements between the US and the GCC.
This sentiment was echoed by John Podgore, who voiced the opinion that the trade relationship between the US and the UAE was here to stay.
US exports to UAE growing
Podgore pointed out that the US exports to the UAE were up 36 per cent from 2010 to 2011 and during the same period UAE exports to the US more than doubled.
The numbers for 2012 are also very good, with US exports of goods to the UAE growing versus the respective period in 2011 and the UAE exports to the US tracking closely the figures for the respective period in 2011, indicating a strong relationship across the board.
Looking into how the energy equation is being affected, Philippe Dauba-Pantanacce cited a recent report issued by the International Energy Agency which stated that the US could become energy self-sufficient within the next four years and which has led to the start of a debate within the GCC and greater Middle East as to whether the US would still have a strategic military interest in the region or whether they might start disengaging from the Arab world. Dauba-Pantanacce, however, expressed reservations as to the probability of complete American disengagement for a number of reasons.
“First of all, the projections of the report are subject to specific conditions such as the adoption of an unconventional energy source model and continued high oil prices. Should the oil price suddenly drop, the outcome could be considerably different.
“Also the importance of the GCC area in terms of its ability to cost-effectively access oil will always be a factor.
“Even if the US is not dependent on GCC oil — the US already sources only 11 per cent of its oil consumption from the Middle East — it is still in their best interest to ensure that this region remains safe for this very reason,” he remarked.
Dauba-Pantanacce also remarked on the importance of China’s dependency on oil from this region, saying: “China is both a growing economic power and one of the world’s biggest populations, which definitely warrants the US keeping a strategic presence in the GCC, providing them a bargaining chip with the Far Eastern giant.
“Delving deeper into the political implications of Obama’s re-election, especially concerning US foreign policy, and the issue of increased international disengagement from direct international intervention by the United States, David Smoot said that much of America’s foreign policy under Obama seems to have been driven by a reaction to the previous administration’s policy, the wish to separate from that legacy and to re-enter the international system.
“What has evolved from this is instead of unilateral action being taken there is a more multilateral approach with a strategy of working through proxies to accomplish foreign policy objectives.”
John Podgore further expounded on the matter, remarking: “As opposed to an Obama doctrine of disengagement, what Obama has realised is that if you look at the equation of the last twelve years and the limitations of the American military, there’s only so much you can do with the tip of the spear.”