California and the Gulf: more unites than divides

Creative Commons/Adoramassey

There was little sign of recession and downgrade on the Interstate 110 freeway in central Los Angeles this week.

In fact, it was the exact opposite. The road is the main conduit for traffic between the industrial south of the city, with its sprawling airport, and the financial and cultural zones further north.

It was jam packed with traffic, crawling along at a snail’s pace for long stretches, as Angelinos went enthusiastically about their business.

In Dubai, one of the most reliable indicators of economic activity is the volume of traffic on Sheikh Zayed Road. In LA – a city in which I, as a long-term UAE resident, feel very comfortable – it is the 110 that provides the economic litmus test.

I’ve been coming to California regularly since before the pandemic, when my daughter moved to LA with her American husband and later made me a very proud grandfather. Pre-Covid the freeway was one big parking lot for much of the day.

When I came in the summer of 2020 after Emirates resumed its daily direct flights, it was a tarmac wilderness and driving in the city was a delight.

Now it is back to nightmarish again, but if that is the price of economic wellbeing, few will resent it.

I landed at LAX the day that Fitch, the global ratings agency, stripped the USA of its top level credit rating.

The reason for the downgrade – flagged some time ago but still sparking a sense of outrage among policymakers and commentators – were twofold: concerns over rising debt levels, and increased “governance” volatility.

It’s hard to argue with Fitch on either count.

US debt stands at 112 percent of GDP, and recent budget cycles have been marked by the cliffhanging possibility that Uncle Sam could technically go bust as Congressmen play politics with the annual fiscal bill. US debt statistics are worse than any of its other top-rated rivals.

What Fitch calls governance – the other reason given for the downgrade – is actually politics, and this was highlighted by the other big event of last week: the indictment of former President Donald Trump on charges relating to the alleged insurrection in Washington after the 2020 election. US civil society certainly seems on a knife edge.

Add that to the ongoing debate on whether or not the US economy will technically fall into recession this year, or next, and it looks a sorry mess.

Why should all this matter to the Middle East? After all, the accepted wisdom is that the region in general, and the UAE and Saudi Arabia in particular, are tilting towards the east, and the big fast-growing markets of China and India.

Why should the Arab world be concerned about what happens in a declining economic and military superpower?

Well, it is hard to know where to begin with a detailed answer to that, but it ranges across the full range of economic, energy, financial, social and cultural factors.

In a nutshell, the Arab world and the USA – and the UAE, Saudi Arabia and California in particular – have a lot more in common than they might acknowledge.

California chiseled a near-dream lifestyle out of a challenging geography and climate, largely because of the huge amounts of oil that were discovered in its own desert areas in the mid-nineteenth century.

The Gulf is in the process of doing the same, exploiting its far greater natural resources to make it a lifestyle destination of choice as well as a business hub, with all the trappings of hi-tech “smart” living that Californians take for granted.

Maybe that is why, despite all the supposed “tensions” that are constantly being reported between the USA and the Gulf, my plane from Dubai to LA was packed with Arab tourists on their way to sample the delights of the Golden State, as well as a fair number of Khaleejis who were on their way to visit family and friends, or tend to businesses.

I struck up a plane conversation with an Emirati whose Egyptian wife has an extensive family in Pasadena, in north LA, not far from my daughter’s home in nearby Mount Washington.

The Egyptians are in the second generation of US citizenship, and have built up a typically Arab family-business structure, with interests in retail, real estate, construction and the motor trade, the Emirati told me.

He comes to LA at least half a dozen times a year, on business and pleasure, and has been a big investor in property in some of LA’s more glitzy areas around Beverley Hills and along the Californian coast at Malibu and Santa Barbara.

“I really feel at home in LA. I don’t even mind the freeways,” he said. I totally agreed, as we swapped mobile numbers and promised to meet for a drink next week.