Jul 10, 2015 2:09 PMBy R. Jason Huf
When the Saudi government decided to ramp up the production of light, sweet crude oil and crash the price of it world-wide, the first thing most people in the United States (quite rightly) noticed was the sharp decline in the price of gasoline. It’s the best break working people in America have enjoyed in a long time, and has generated economic growth that no artificial government “stimulus” program can ever hope to match.
Middle East practitioners like myself, on the other hand, immediately understood two things: 1. the increase in production was designed to dampen the profitability of energy projects, particularly by oil & gas producers in the United States – which, in turn, helps to continue to make the maintenance of stability in Saudi Arabia a priority for Western countries and their oil-dependent economies; and, 2. it was a direct attack against the cohesiveness of the Kingdom’s arch-enemy, Iran, and some of its anti-Western allies such as Venezuela and, particularly, Russia (all three countries having economic models with price floors for oil that are unsustainable in the current environment).
Iran's desperate economic situation notwithstanding, they have lashed out and struck back on a variety of levels and are emboldened by recent victories in Yemen, Iraq and Vienna. Iran is increasingly aggressive in the region, and Saudi Arabia is feeling ever distant from the United States. As to the fear of a regional arms race stemming from the unabated existence of the Iranian nuclear arms program, such an arms race is already underway.
Keenly aware that the balance of power in the Middle East continues to swing in favor of Iran and that the United States is decreasingly interested in serving as the region's chief guarantor of security in the region, the Arab states may feel that they are in a desperate situation themselves. Let us not forget, that the despicable and barbaric terrorist organization ISIS/ ISIL was originally cobbled together with the support of Turkey and Qatar to serve as a hyper-radicalized Sunni buffer against encroaching Shia (Iranian) power. The Saudi move to create an oil supply glut and the joint Saudi/ Egyptian military operations against Iranian clients in Yemen seem, thus far, insufficient to halt Iranian momentum.
If the present trend continues, a direct region-wide conflict between Saudi Arabia, Egypt, Jordan, et al vs. Iran and Syria seems more likely, not less.
We live in an era when asymmetrical warefare that utilizes non-uniformed combatants targeting civilians to engender fear and instability so as to achieve a political or otherwise socially relevant end (e.g., "terrorism") has become a regular feature, turning cities well behind the lines of a given conflict into battlefields themselves. What do you do when you are a business that has invested in a region wherein the situation has become so uncertain?
Well, that depends on the industry you are in, how much risk you (and your insurance providers) are willing to absorb, and what kind of talent you think you can attract to work in such an environment.
As for myself, I remain committed to my relationship with Jeddah. The Jeddah office consists of local personnel, I have spent years developing my practice, and I have never been one to simply throw away the fruits of my own hard work. At present, my inclination is to stay the course.
In fact, having considered this contingency for some time, I am currently leaning toward expansion, rather than withdrawal. I feel it may soon become time to further live up to my firm's catch phrase - and, follow my natural instincts - and explore.
Whereas some firms may be examining their options on executing an exit strategy, I am exploring the possibility of expanding into new jurisdictions and expanding the range of assistance I can provide to Western companies that remain in the region.
As an attorney, your practice is client-driven. Some companies will stay, some will leave and new businesses will enter one or more Gulf Cooperation Council markets. There will continue to be a need for Western legal expertise working hand-in-hand with local practitioners throughout the region.
Perhaps more fundamentally, I am proud of the work I have done over the years. From assisting with Shari-ah-compliant finance to education reform, I have been a small piece of a small piece in the jigsaw puzzle of helping to foster an environment wherein one may someday see a broad-based, self-sustaining middle class in the Middle East.
This sense of accomplishment will be foremost on my mind as I look toward Exploring the Boundaries of My Own Business...
– Jason Huf
Friday, July 10, 2015
New York, NY
Jason Huf International, pc
"Exploring the Boundaries of Your Business."