Bahrain: notes from a small island
Posted on 03 June 2010 with no comments from readers
This week ArabianMoney has been reporting live from Bahrain, once the undisputed Gulf regional financial centre, a crown it largely lost to Dubai during the boom years. But Bahrain has not stood still.
The soaring new World Trade Centre and 51-storey twin towers of the Bahrain Financial Harbour are testament to that. Then again if you look at the three half-built towers within the BFH it is clear that Bahrain has also suffered from the same economic sudden stop that hit Dubai 20 months ago.
Reality check
The official story is that Bahrain is surviving the crisis better than its rival. Yet the financial centre has been rocked by the financial crisis enveloping two Saudi groups and one of the founders of the BFH has just sold its stake, presumably to raise cash.
Those abandoned towers on the BFH are also not alone. The streets of Manama are full of projects that have stopped suddenly. Basically when the global financial crisis erupted the credit stopped and so did the construction work it was financing.
Of course it is not all gloom and doom. Oil and gas projects in the region seem comparatively unaffected, and indeed the oil price is still three times what it was at the start of the decade. That cash flow has always been the linchpin of Bahrain’s existence as a financial centre.
Not a global city
Dubai by contrast is the global trading and financial hub of the region, and while this proved a strength in the boom years it is less of an advantage now with the whole world in financial difficulty. Then again Dubai has an infrastructure and tourism business that Bahrain can never hope to match.
Even in Bahrain there is a quiet respect for Dubai’s achievement in mobilizing a $300 billion investment into the city from 2003-2008. In Bahrain the three tallest towers really stand out, and they are a visible sign that the boom did not entirely pass the kingdom by, but in Dubai there are hundreds of new towers.
Dubai did manage to snatch the financial centre crown from Bahrain in the boom, and although that might be a crown-of-thorns in the recession years – with the debts incurred in the boom to sort out – it will still be a prize worth having for the future.
